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Purpose Personified GOOD Agency April 2021 (002)

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The 7 Fall 2021 runway trends shaping future assortments | EDITED | Retail Market Intelligence

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Visitors to Simon Miller's website will soon find some surprising additions to the usual assortment of ribbed top-and-trouser sets, heeled clogs and handbags. Starting next month, the brand will sell everything from towels and pillows to sculptures, paintings and vintage furniture.

Simon Miller isn't alone in tempting customers to overhaul their homes in addition to their wardrobes. This year, a flurry of fashion labels have newfound ambitions in the space, betting shoppers who've stopped splurging on evening gowns and stilettos will fall for rugs, plates, vases and chairs. They join brands like Ralph Lauren and Fendi, which have been in the home business for decades, as well as fast-fashion players like Zara-owner Inditex and H&M group.

The home goods market was expanding pre-Covid, with global sales rising 3.4 percent last year to $682 billion, according to Euromonitor International. They've dipped in 2020, though the decline is mild compared with plunging apparel revenue. And Euromonitor predicts sales of kitchen and dining items - the core of many fashion brands' newer home offerings - will rise 1.3 percent to $93.7 billion this year.

In the US, the market has been particularly strong. Market research company NPD Group is predicting non-electric housewares will enjoy 13 percent growth over the holiday season this year in the US.

"What the pandemic did is it just threw fire on this," said Joe Derochowski, vice president and home industry advisor for the NPD Group. "It has actually helped fuel growth, in part because now you're just spending more time in the home. "

It's a universe with a radically different rhythm from fashion.

At Matchesfashion, sales in the home category have doubled year-on-year since April. Blankets and throws from Pendleton and Elder Statesman are selling particularly well, as are vases from Anissa Kermiche and Reflections Copenhagen, said senior buyer Chelsea Power.

"It becomes almost like dressing up, but instead of dressing yourself, you're dressing your home and you're dressing your table," said Aquazzura founder Edgardo Osorio, who will launch his new Aquazzura Casa business with a collection of tableware next Spring.

In the secondhand market, The RealReal is experiencing strong demand for homeware and art, even as sales of apparel and footwear are lagging, chief executive Julie Wainwright said on a call with investors earlier this month.

Antwerp-based label Bernadette presented its debut collection of home linens and ceramics (plates, bowls and mugs) to buyers alongside its Spring/Summer 2021 apparel collection. At €35 for a side plate and €330 for a large platter it's also a new entry point into the brand, whose dresses are usually priced between €500 and €1,000.

Almost every one of its wholesale partners bought into the new home line alongside the clothes, according to the brand.

"They were pleasantly surprised to see how [our brand has] developed and to see how it all comes together," said Charlotte De Geyter, who co-founded the brand in 2018 with her mother Bernadette De Geyter.

Fashion brands see home goods as a natural fit because the same aesthetic consumers love to see in a dress can often translate into dinner plates and ottomans. The similarities often end there. Unlike clothes, which are relatively easy and affordable to ship, home goods can be fragile or bulky. The industry operates with longer lead times and different processes of development, production and quality control. Plus, consumers who swap wardrobes from season to season might want to eat off their Dior plates for years or even decades; functionality matters as much as design.

"It's a universe with a radically different rhythm from fashion," said Isabelle Dubern-Mallevays, co-founder of interior design retailer The Invisible Collection and former creative director of Dior Maison. "Brands have to have a different mindset and treat this activity separately."

That's why British label Shrimps partnered with home retailer Habitat for its segue into home goods. The collaboration began in 2018 with bedding and cushions, but for its second iteration this year, it spanned table lamps, armchairs and cabinets woven from rattan.

"As an independent brand, we wouldn't even know how to source that, let alone how to technically build a chair," said Nikole DeSantis, the brand's commercial director. "We can do coats, but we have no idea about furniture. ... If you don't have that skill-set as a brand it's a logistical nightmare."

Even large fashion brands often turn to licensing deals for their furniture. Versace outsourced its furniture business with a view to scale it up through a license granted to Lifestyle Design Group in September.

"We will now be able to be more ambitious and grow the collection even further thanks to the expertise of our new partners," Dontella Versace said in a statement at the time.

Aquazzura's Osorio set up Aquazzura Casa as a sister company to its core footwear label with new design, development and sales teams. He appointed Fiona Leahy, whose event design and production company creates table-scapes for fashion's glitziest names, as co-creative director of the new venture.

"I love interiors, but I [wanted] to hire a professional like Fiona who could also guide me through all the specifics of the issues of design," he said.

Where the fashion industry does have expertise is in branding and marketing. Particularly within the luxury space, selling aspiration is intrinsic to what brands do. This is important for big ticket home purchases, where storytelling helps drive sales.

"There's something to be said about the power of a brand and making people dream of our specific dream: the dream of Italy, the dream of the dolce vita," said Osorio. "People love buying into a world ... of a brand."

Plus, established fashion names have the advantage of an existing fanbase that are eager to buy into their story. Garnering awareness and drumming up excitement isn't as much of a battle for an established fashion brand as it would be for a new speciality business.

Fashion players can stand out against specialist home goods brands by ensuring collections lean into a brand's specific point of view, said Dubern-Mallevays. Fashion home goods have to go beyond functionality and play to the customer's emotional desire to be part of a brand universe.

"You don't change plates like you change It bags," said Dubern-Mallevays. "There is a sentimental link, more intimate than for fashion."
Related Articles: Why Luxury Retailers Are Making a Play for Housewares Now That Everyone Has Sweatpants, What Else Do They Want to Buy?

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Visitors to Simon Miller's website will soon find some surprising additions to the usual assortment of ribbed top-and-trouser sets, heeled clogs and handbags. Starting next month, the brand will sell everything from towels and pillows to sculptures, paintings and vintage furniture. Simon Miller isn't alone in tempting customers to overhaul their homes in addition to their wardrobes.

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2020 was different from any other year and although it was very challenging, it opened doors for many new opportunities, innovations, and trends. Some of them originated years ago but some are almost exclusively owed to the unique past year. Many brands used this opportunity to enhance and advance their business models and therefore, start [...]

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AI is likely to have a significant impact on the retail industry in several ways.

1. Personalisation: AI can be used to personalise the shopping experience for individual customers. For example, it can be used to recommend products to customers based on their browsing and purchase history, as well as their social media activity.

2. Predictive Analytics: AI can be used to analyse data from various sources (such as customer data, sales data, and social media data) to make predictions about customer behaviour and trends in the market. This can help retailers to make more informed decisions about what products to stock, how to price them, and how to market them.

3. Inventory Management: AI can be used to optimise the management of inventory. For example, it can be used to predict demand for products, track inventory levels in real-time, and automate reordering processes.

4. Automation of repetitive tasks: AI can help in automating repetitive, mundane tasks like price checking, stock checking and much more.

5. Chatbots: AI can be used to create chatbots that can answer customer questions, provide recommendations, and even complete transactions without the need for human assistance.

6. Image recognition: AI can be used for automated image recognition for products in online retail, which allows for easier product search and category browsing.

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Although we are facing economic headwinds, multiple tailwinds including Artificial Intelligence (AI), retail media, the transition to renewable energy and the return of demand for physical stores are laying new foundations from which retailers can grow their businesses in the year ahead.

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What Happened to New York Fashion? | Intelligence | BoF

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With the COVID-19 pandemic dominating thoughts and minds, fashion executives are planning for a range of scenarios and hoping for a speedy global recovery. However, amid increasing pressure on performance, shifting consumer behaviors, and accelerating demand for digital, there is an imperative to act decisively to prepare for the next normal.

After a year in which the fashion industry posted record-low economic profits, business leaders are on the front foot, seeking to innovate while continuing to engage their core constituencies. Given the disruptions of recent months, many companies are reconnecting with their supply chains, making tough decisions-for example, about ROI at store level-and ramping up omnichannel services. The beauty segment, covered for the first time this year in our The State of Fashion 2021 report, has remained relatively insulated from the pandemic, offering consumers a comforting pick-me-up in challenging times. As we move toward recovery, companies in the beauty segment have a chance to align with shifting category and regional opportunities.

Those are some of the findings from our latest report, The State of Fashion 2021, written in partnership with the Business of Fashion (BoF). The report, the fifth in our annual series, drills down into the major themes affecting the fashion economy and assesses a range of possible responses. Reflecting our conversations with industry leaders over recent months, it examines the ten key trends likely to shape the business over the coming year. Our latest reading of the our global fashion index, meanwhile, reveals new insights into company performance by category, segment, and region.

Silver linings

The sober mood among fashion executives surveyed in last year's report has evolved over recent months into a strong determination to manage the industry through the COVID-19 pandemic. Our calculations, based on the changes in market capitalizations over time in our index on global fashion, suggest that the industry's economic profit will fall by 93 percent in 2020 after rising 4 percent in 2019 (Exhibit 1). That translates into a significant increase in the number of companies that are "value destroyers," which we expect will rise to 73 percent of those in the index in 2020, compared with 60 percent in 2019.

Still, there are silver linings among the clouds. While the crisis has visited a devastating impact on businesses and jobs, it may also have accelerated responses that can lead to positive outcomes. Indeed, many fashion companies have taken time during the crisis to reshape their business models, streamline their operations, and sharpen their customer propositions.

Looking forward, our base case is cautiously optimistic, with the virus more effectively controlled over the coming year, thanks to a strong public-health response. At the same time, government interventions will partially offset economic impacts, and global travel will pick up, alongside the possibility of larger social gatherings. In that scenario, we would see markets such as China recovering strongly. We predict a 5 to 10 percent sales growth in China in 2021 compared with 2019. Europe, on the other hand, will probably continue to feel the effects of subdued tourist arrivals, leading in 2021 to a 2 to 7 percent sales decline from 2019. Moreover, precrisis levels of activity are unlikely to return before the third quarter of 2022. We expect a similar trajectory in the United States, with sales down 7 to 12 percent next year compared with 2019, and only a modest recovery before the first quarter of 2023.

Where there is positive momentum, the primary driver will continue to be digital channels, reflecting the trend established before the COVID-19 crisis and the reluctance of people in many countries to gather in crowded environments. Indeed, recent data show that we have vaulted five years forward in consumer and business adoption of digital in a matter of months. Around the globe, we expect more than 20 percent annual digital growth in 2021 (with 30 percent in Europe and the United States) compared with 2020. Other positive trajectories will include the growing influence of platform propositions as customers warm to marketplace experiences and renewed appetite among both brands and consumers for local engagement-the personal touch that reflects the priorities of many.

Against this background, fashion-industry fortunes are highly polarized. Given the disruptions in financial year 2019, it was not possible for us to calculate our annual list of 20 "super winners" accurately. Instead, we referenced our 2018 list to gauge the fortunes of the elite group. Perhaps unsurprisingly, investors this year had more confidence in the top 20 than in other companies, and super winners were less badly hit by the April stock market sell-off than their peers were (-26 percent from December, compared with -33 percent on average). By the time the Northern Hemisphere went on its August vacation, the super winners had recovered on aggregate to just 5 percent below precrisis levels.

Companies that have performed the best over recent months tended to share at least one of two key characteristics (Exhibit 2). Many have had a strong Asia-Pacific focus, reflecting the economic strength of the region and the relatively lower impact of the pandemic there, and many have offered a compelling digital proposition. E-commerce players, such as ASOS, FARFETCH UK, Revolve, and Zalando, have consistently outperformed in 2020, as locked-down customers turned to digital devices to shop. By August, such digital-first players were trading 35 percent higher, on average, than they did in December 2019.

Given the standout performance of digital channels in the current environment, we expect digital to remain king in 2021. Indeed, some 22 percent of executives say it will be the key momentum driver in the coming year-a percentage point less than the proportion that cites "uncertainty" and slightly more than the 20 percent that pick "challenging."

Ten themes for 2021

As the world recovers from the COVID-19 pandemic, what will be the defining themes in the business of fashion? Our discussions with industry executives suggest that the key drivers will include shifting consumer behaviors (in relation to digital channels, social-justice concerns, and a reluctance to travel), opportunistic investment, and the need to build more efficient, simple, and demand-focused operating models (Exhibit 3).

As decision makers continue to manage uncertainty, the most successful will be those that get a grip on the trends shaping the fashion landscape. That means focusing on an omnichannel perspective, of course, but also emphasizing the importance of sustainability through the value chain. Consumers (and increasingly, investors) will reward companies that treat their workers and the environment with respect, and the deeper relationships that emerge will bring benefits in agility and accountability.

Physical retail has been under historic levels of pressure. In the United States alone, some 20,000 to 25,000 stores were expected to close in 2020, more than double the number that did so in 2019. With the pandemic adding to the segment's woes, many brands have embarked on strategic reviews or have compressed multiyear transformations into just a few months. In 2020, Nike announced the acceleration of its digital strategy and investment in its highest potential areas, which it said would lead to job cuts in stores. Zara said that it plans to cut 1,200 stores over two years and invest €2.7 billion in store-based digital. Still, we do not believe the curtain is falling on physical channels. Instead, from the wreckage of 2020, a sleeker, more focused offering will emerge. That offering will combine the best of human and automated services-the beginning of a truly "bionic" customer experience.

We see brands rethinking store formats and leveraging data and analytics to predict footfall, manage assortments, and built personalized offerings. Flagship stores will be branded as discovery zones and tasked with creating emotional connections with customers. We have already seen Burberry and Nike, as well as digitally native ARIAS New York, invest in hybrid spaces and deploy technologies such as apps and body scans to create more compelling experiences. At the same time, we are likely to see more nuanced assessments of store ROI based on a combination of digital and physical lenses. With companies in China leading the way, brands will engage even more closely with social media to offer shoppers exclusive content and personalized experiences.

Strategically, there will be an imperative in 2021 to manage commercial opportunities actively and to be acute in picking winning segments, markets, and channel combinations. With tourism in the doldrums, domestic outlets will become more important than ever. We also expect to see a rise in M&A activity as companies take advantage of low valuations and grab share in fast-growing markets.

There is little doubt that 2021 will continue to be tough for many as the COVID-19 pandemic tracks an uncertain trajectory. The task for decision makers, therefore, is to find silver linings, knowing that times of change are inherently rich with opportunity. Fashion companies that double down on strategy, align with key trends, and reflect an evolving consumer landscape are likely to emerge from the crisis stronger, leaner, and ready to thrive in the next normal.
ABOUT THE AUTHOR(S)
The authors of this article are Imran Amed (founder, editor in chief, and CEO of the Business of Fashion, and an alumnus of McKinsey's London office), Anita Balchandani (a partner in the London office), Jakob Ekeløf Jensen (a consultant in the London office), (a senior partner in the Frankfurt office), Saskia Hedrich (a senior expert in the Munich office), and Felix Rölkens (an associate partner in the Berlin office).

The authors wish to thank Sarah Andre, Althea Peng, Sonja Penttilä, and Robb Young for their contributions to this article.

By Imran Amed, Anita Balchandani, Achim Berg, Saskia Hedrich, Jakob Ekeløf Jensen, and Felix Rölkens
Fashion executives are focusing on crisis management now but eventually must shift to reimagining the industry. How will changes to the global economy and consumers' behavior affect fashion in the postcoronavirus world?
Even before the coronavirus disrupted financial markets, upended supply chains, and crushed consumer demand across the global economy, fashion-industry leaders were not optimistic about 2020. The industry was already on high alert, and executives expressed pessimism across all geographies and price points in our annual report, The State of Fashion 2020, released late last year. But fast-forward a few months, and fashion's outlook has gotten dramatically and suddenly bleaker. The industry is now on red alert.

This unforeseeable humanitarian and financial crisis has rendered previously planned strategies for 2020 redundant, leaving fashion businesses exposed or rudderless as their leaders confront a disorienting future and vulnerable workers face hardship and destitution. With this special coronavirus update to The State of Fashion 2020, we have taken a stance on what our new normal will look like in the aftermath of this "black swan" event to provide insights (from analyzing surveys, data, and expert interviews) for fashion professionals as they embark on the 12- to 18-month period after the dust settles.

The black swan and fashion

COVID-19 could spur the biggest economic contraction since World War II, hitting every sector from finance to hospitality. Yet fashion, because of its discretionary nature, is particularly vulnerable. The average market capitalization of apparel, fashion, and luxury players dropped almost 40 percent between the start of January and March 24, 2020 -a much steeper decline than that of the overall stock market.

Humanitarian repercussions are expected to outlast the pandemic itself. Dire consequences for fashion, one of the biggest industries in the world, generating $2.5 trillion in global annual revenues before the pandemic, entails joblessness or financial hardship for people across the value chain.

We estimate that revenues for the global fashion industry (apparel and footwear sectors) will contract by -27 to -30 percent in 2020 year-on-year, although the industry could regain positive growth of 2 to 4 percent in 2021 (compared with the 2019 baseline figure). For the personal luxury goods industry (luxury fashion, luxury accessories, luxury watches, luxury jewelry, and high-end beauty), we estimate a global revenue contraction of -35 to -39 percent in 2020 year-on-year, but positive growth of 1 to 4 percent in 2021 (compared with the 2019 baseline figure). If stores remain closed for two months, McKinsey analysis approximates that 80 percent of publicly listed fashion companies in Europe and North America will be in financial distress. Combined with the McKinsey Global Fashion Index (MGFI) analysis, which found that 56 percent of global fashion companies were not earning their cost of capital in 2018, we expect a large number of global fashion companies to go bankrupt in the next 12 to 18 months.

The interconnectedness of the industry is making it harder for businesses to plan ahead. Just as China inched through recovery, outbreaks worsened in Europe and the United States. But it is in the developing world, where healthcare systems are often inadequate and poverty is rife, that people will be hit the hardest. For workers in low-cost sourcing and fashion-manufacturing hubs, such as Bangladesh, Cambodia, Ethiopia, Honduras, and India, extended periods of unemployment will mean hunger and disease.

The crisis is affecting daily lives, instilling anxiety and uncertainty in the minds of almost everyone. Indeed, consumer pessimism about the economy is widespread, with 75 percent of shoppers in Europe and the United States believing that their financial situation will be affected negatively for more than two months.

Although the duration and ultimate severity of the pandemic remains unknown, it is apparent that the fashion industry is just at the beginning of its struggle. By causing blow after blow to both supply and demand, the pandemic has brewed a perfect storm for the industry: a highly integrated global supply chain means that companies have been under immense strain as they have tried to manage crises on multiple fronts as lockdowns were imposed in rapid succession, halting manufacturing in China first, then Italy, followed by countries elsewhere around the world.

A freeze on spending is aggravating the supply-side crisis. Widespread store closures for an industry reliant on offline channels, coupled with consumer instinct to prioritize necessary over discretionary goods, hit brands' bottom lines and depleted cash reserves. Even online sales have declined 15 to 25 percent in China, 5 to 20 percent across Europe, and 30 to 40 percent in the United States.

Once the dust settles

Once the dust settles on the immediate crisis, fashion will face a recessionary market and an industry landscape still undergoing dramatic transformation. The exhibit unpacks five areas that could see significant changes; the full report explores these areas in greater depth. We expect a period of recovery to be characterized by a continued lull in spending and a decrease in demand across channels. As noted in our previous articles on " getting woke," radical transparency, and sustainability first, the consumer mindset was already showing signs of shifting in certain directions before the pandemic.

Now, the resulting "quarantine of consumption" could accelerate some of these consumer shifts, such as a growing antipathy toward waste-producing business models and heightened expectations for purpose-driven, sustainable action. Meanwhile, some of the shifts we will witness in the fashion system, such as the digital step change, in-season retail, seasonless design, and the decline of wholesale, are mostly an acceleration of the inevitable-things that would have happened further down the road if the pandemic had not helped them gain speed and urgency now.

The coronavirus also presents the fashion industry with a chance to reset and reshape the industry's value chain completely-and an opportunity to reassess the values by which it measures actions. We expect that themes of digital acceleration, discounting, industry consolidation, and corporate innovation will be prioritized once the immediate crisis subsides. Even after witnessing waves of insolvencies, industry leaders will need to get comfortable with uncertainty and ramp up future-proofing efforts as the potential for further outbreaks and lockdowns loom.

This will also be a time for collaboration within the industry-even among competing organizations. No company will get through the pandemic alone, and fashion players need to share data, strategies, and insights on how to navigate the storm. Brands, suppliers, contractors, and property owners should also find ways to share the burden.

This joint report by the Business of Fashion and McKinsey is an effort to advance the discussion beyond crisis management and immediate contingency planning by outlining the areas in which the fashion industry must focus once the dust settles on the current crisis. Exactly when this will happen is impossible to know for sure, except that it will, in all likelihood, be linked to the discovery of a workable antiviral treatment and delivery of a proven vaccine, which some experts say is at least 12 to 18 months away.

Navigating this uncertainty will not be easy for fashion leaders. Players need to be decisive and start putting recovery strategies into motion to emerge with renewed energy. The crisis is a catalyst that will shock the industry into change-now is the time to get ready for a postcoronavirus world.

Download The State of Fashion 2020: Coronavirus Update, the full report on which this article is based (PDF-3MB).
ABOUT THE AUTHOR(S)
Imran Amed, the founder, editor-in-chief, and CEO of the Business of Fashion, is an alumnus of McKinsey's London office, where Anita Balchandani is a partner and Jakob Ekeløf Jensen is a consultant; is a senior partner in the Frankfurt office; Saskia Hedrich is a senior expert in the Munich office; and Felix Rölkens is an associate partner in the Berlin office.

The authors wish to thank McKinsey's Tiffany Wendler, as well as the Business of Fashion's Robb Young, for their contributions to this article.

By Imran Amed, Anita Balchandani, Achim Berg, Saskia Hedrich, Shrina Poojara, and Felix Rölkens
The industry is not looking forward to 2020-suggesting strategic clarity will be important.
The prevailing mood of fashion leaders is one of anxiety and concern. On the one hand, evolving channels, shifting markets, and groundbreaking research offer revenue opportunities and the chance for radical innovation. On the other, global economic growth is slowing and competition is more intense than ever.

To thrive in this environment, companies must think strategically, sharpen their decision making, and keep their fingers on the pulse of customer demand. They need to get digital right and to address consumers increasingly concerned by the climate-change agenda. At the same time, they must cater to local tastes across multiple markets and cultures. One size will not fit all.

These are some of the findings from our latest report, The State of Fashion 2020, written in partnership with The Business of Fashion (BoF). This fourth in our annual series analyzes major themes around the fashion economy and breaks new ground to explain the dynamics driving the industry. Our survey of 290 global fashion executives and interviews with thought leaders and pioneers have helped us identify ten key themes that will set the agenda in the year ahead. The latest reading of the McKinsey Global Fashion Index (MGFI), meanwhile, reveals new insights into fashion-company performance by category, segment, and region.

A darkening mood

For many in the fashion industry, the glass is half empty. The mood among respondents to our executive survey is sober across geographies and price points, and the pockets of optimism seen last year in North America and the luxury segment have steadily evaporated (Exhibit 1).

The MGFI forecasts that growth will slow to 3 to 4 percent in 2020, slightly below the predicted rate for 2019. Strikingly, only 9 percent of respondents think conditions will improve next year, compared with 49 percent who said the same last year.

Economic profit grew for the second year running in 2018, following consecutive annual declines from 2012 to 2016 (Exhibit 2). The 16 percent year-on-year rise came largely from improved operating margins driven by cost cutting. The average industry EBITA margin was 10.8 percent, a tick up on 2017 and the highest since 2014.

One reason that executives are not breaking out the bunting is that the outlook for the global economy is less rosy than it was a year ago. Against this background, fashion-industry fortunes are highly polarized. For an exclusive group of "Super Winners," the sun is shining (Exhibit 3); by economic profit, these 20 companies added more to the industry bottom line in 2018 than all others combined. The Super Winners include three new entrants-Anta Sports, Heilan Home (HLA Corporation), and Lululemon-reflecting the strength of sportswear and the growing influence of Chinese players. In luxury, Kering made an impressive rise through the ranks, driven by Gucci's double-digit sales growth and strong performance in Asia-Pacific markets such as Japan. Not only are leading companies highly value-creating, they are also at the cutting edge of innovation. They are also most successful in attracting funding and talent, often leaving the rest to fight over scraps.

Alongside public companies, we also identified a group of "hidden champions." These privately owned gems often dominate their category areas and generate significant revenues. Some are household names, while others are less visible but still pack a punch. Among the well-known brands, Chanel is a significant player, with revenues of more than $10 billion, while Rolex is one of the few large independent and private luxury watch brands remaining. At the opposite end of the price spectrum is Primark, whose commitment to its core value proposition has made it a formidable competitor. These players show that there is a great deal of industry value outside the spotlight, and the "hidden champions" too have much to offer alongside their listed counterparts.

Of course, for every success, there are also relative failures. A growing number of publicly traded and private companies have become "value destroyers." The midmarket in particular is in the doldrums, generating negative returns for shareholders. For some, the abyss beckons.

Ten themes for 2020

What will define the industry in the coming year? Based on our executive survey, the words on everyone's lips are sustainability, digitization, and innovation (Exhibit 4).

When it comes to sustainability, the industry's track record remains a source of concern. The textile sector still represents 6 percent of global greenhouse-gas emissions and 10 to 20 percent of pesticide use. Washing, solvents, and dyes used in manufacturing are responsible for one-fifth of industrial water pollution, and fashion accounts for 20 to 35 percent of microplastic flows into the ocean. Consumers are increasingly waking up to this reality and demanding change. In August 2019, Kering CEO François-Henri Pinault spearheaded an industry-wide pact to achieve net-zero emissions by 2050. According to McKinsey's 2019 Apparel Chief Purchasing Officer Survey, while the absolute number of sustainable fashion products remains low, there has been a fivefold increase over the past two years.

Looking forward, we see more research into sustainable materials and technologies, as well as the circular economy. This should lead to a move beyond 2019's focus on transparency toward real commitment. That's great news for consumers and for companies that can make sustainability real. However, given the scale of investment required, it means nervous times for small and midsize players.

Equally, consumers and advocates are calling for the industry to become more inclusive. We see 2020 as being a watershed for "Inclusive Culture," with diverse races, genders, and sexual orientations increasingly present across organizations and in leadership roles.

Digital disruptors will face more cautious investors in the year ahead. Stock-market valuations of tech players have reached dizzying levels, reminiscent of the dot-com boom of the early 2000s, while a number of private companies have reached unicorn status. The trick in 2020 will be to prove to investors they can turn potential into profit. At the vanguard, we are seeing a new breed of direct-to-customer companies. Asia in particular is emerging as a fertile ground for small and midsize enterprises that leverage e-commerce to reach out from the factory floor.

At the forefront for many is the future role of brick-and-mortar stores. Although they are written off by some as "too 20th century," we take a more constructive view. We see local stores in particular building a role as partners in the digital revolution, helping customers touch, feel, and experience in convenient locations as they browse online and offline.

The bottom line? The coming year will be tough, as the digital shakeout gathers pace, customers demand more on sustainability, and slower growth puts pressure on margins. However, there will be opportunities. Brands that can align with the dominant trends and continue to innovate are most likely to ride the challenges and emerge ahead of the pack.

Download The State of Fashion 2020, the full report on which this article is based (PDF-7 MB).
ABOUT THE AUTHOR(S)
Anita Balchandani is a partner in McKinsey's London office, where Shrina Poojara is a consultant; is a senior partner in the Frankfurt office; Saskia Hedrich is a senior expert in the Munich office; and Felix Rölkens is an associate partner in the Berlin office. Imran Amed is the founder, editor-in-chief, and CEO of The Business of Fashion.

The authors wish to thank McKinsey's Tiffany Chan and Marilena Schmich, as well as The Business of Fashion's Robb Young, for their contributions to this article.

By Imran Amed, Anita Balchandani, Marco Beltrami, Achim Berg, Saskia Hedrich, and Felix Rölkens
The industry as a whole is embracing new opportunities-even as dangers lurk.
The year ahead will be an awakening after the reckoning of 2018-a time for fashion companies to look at opportunities and not just at surmounting challenges. The ones that will succeed will have come to terms with the fact that in the new paradigm taking shape around them, some of the old rules simply don't work. Regardless of size and segment, players now need to be nimble, think digital-first, and achieve ever-faster speed to market. They need to take an active stance on social issues, satisfy consumer demands for radical transparency and sustainability, and, most important, have the courage to "self-disrupt" their own identity and the sources of their old success to realize these changes and win new generations of customers.

They also need to invest in enhancing their productivity and resilience, as the outlook is uncertain. External shocks to the system continue to lurk, and growth cannot be taken for granted.

These are some of the findings from our latest report on The State of Fashion, written in partnership with the Business of Fashion (BoF), which explores the industry's fragmented, complex ecosystem. Our first two reports, last year and the year before, laid the foundation for rigorous in-depth research and analysis, focusing on the themes, issues, and opportunities affecting the sector and its performance. The State of Fashion is now the largest and most authoritative overview of the industry, surveying more than 275 global fashion executives (approximately 30 percent more than last year) and interviewing thought leaders and pioneers. We also highlight the ten trends that will define the fashion agenda in 2019 (interactive).

The report includes the third readout of our industry benchmark, the McKinsey Global Fashion Index. This database of more than 500 companies allows us to analyze and compare the performance of individual companies with their peers, by category, segment, or region.

Sunny intervals but storms ahead

For fashion players, 2019 will be a year of awakening. External shocks to the system continue to lurk around the corner, and growth cannot be taken for granted: the McKinsey Global Fashion Index forecasts growth of 3.5 to 4.5 percent, slightly below 2018 figures. By geography, the most optimistic about the coming year are executives in North America. By segment, the most positive are executives from luxury brands, reflecting their strong growth trajectory in 2018. In all other regions and segments, executives are notably pessimistic, reflecting the potential challenges ahead (Exhibit 1).

All this comes against a backdrop of the fashion industry having turned a corner in 2018, with increased growth justifying the optimism expressed in last year's global fashion survey. The caution in the economic outlook is also reflected in the BoF-McKinsey State of Fashion Survey, with 42 percent of respondents expecting conditions to become worse in 2019.

The rise of the 'superwinners'

Polarization continues to be a stark reality in fashion: fully 97 percent of economic profits for the whole industry are earned by just 20 companies, most of them in the luxury segment. Notably, the top 20 group of companies has remained stable over time. Twelve of the top 20 have been a member of the group for the last decade. Long-term leaders include, among others, Inditex, LVMH, and Nike, which have more than doubled their economic profit over the past ten years (Exhibit 2). According to our estimates, each racked up more than $2 billion in economic profit in 2017.

Ten trends for 2019

This caution is one of our ten trends to watch in 2019. Another is that India is on the rise-its growing middle class, powerful manufacturing sector, and increasingly savvy tech have made it an essential destination for fashion companies. Our third trend is Trade 2.0: a warning that companies should make contingency plans for a potential shake-up of global value chains. The apparel trade could be reshaped by new barriers, trade tensions, and uncertainty. However, there may also be new opportunities from growing south-south trade and the renegotiation of trade agreements.

On the consumer side, we foresee the end of ownership, as concerns about sustainability grow and consumers and companies alike worry about how to alleviate their impact on the environment. Sustainability, which breaks into our respondents' list of the most important challenges for the first time, is evolving from a tick-box exercise into a transformational feature. And "woke" consumers are also pushing for greater transparency into supply chains-and rewarding their favorite brands for taking controversial political stands. At the same time, they are demanding ever-quicker and more seamless fulfillment, from mobile shopping to drone delivery.

In response, wise companies are self-disrupting before upstarts do it for them, engaging in a digital landgrab to diversify their ecosystem, and using automation and data analytics to produce on demand to reduce waste and react rapidly to trends.

The speed of change

Overall, the industry continues to hover in a state of flux, and the fortunes of individual players can turn with frightening speed. As our ten trends indicate, new markets, new technologies, and shifting consumer needs present opportunities-but also risks. We predict that 2019 will be a year shaped by consumer shifts linked to technology, social causes, and trust issues, alongside the potential disruption from geopolitical and macroeconomic events. Only those brands that accurately reflect the Zeitgeist or have the courage to "self-disrupt" will emerge as winners.

Download The State of Fashion 2019, the full report on which this article is based (PDF-3 MB).
ABOUT THE AUTHOR(S)
Anita Balchandani is a partner in McKinsey's London office, where Marco Beltrami is a consultant; is a senior partner in the Frankfurt office, Saskia Hedrich is a senior expert in the Munich office, and Felix Rölkens is a consultant in the Berlin office. Imran Amed is the founder, editor-in-chief, and CEO of the Business of Fashion.

The authors wish to thank McKinsey's Johanna Andersson and Dale Kim, as well as the Business of Fashion's Robb Young, for their contributions to this work.

By Imran Amed, Johanna Andersson, Achim Berg, Martine Drageset, Saskia Hedrich, and Sara Kappelmark
After a challenging stretch, has fashion turned the corner? Things are looking up, but the rebound may be uneven, says this year's The State of Fashion report.
There is general agreement that 2016 was one of the most challenging years the fashion industry has ever seen. But we are now detecting glimmers of hope: executives report optimism (even amid uncertainty), and the McKinsey Global Fashion Index forecasts industry sales growth to nearly triple between 2016 and 2018, from 1.5 percent to between 3.5 and 4.5 percent. Emerging markets remain a crucial source of this growth; indeed, in 2018, for the first time, more than half of apparel and footwear sales will originate outside Europe and North America.

These are some of the findings from our latest The State of Fashion report, written in partnership with the Business of Fashion (BoF) to explore the industry's fragmented, complex ecosystem. Our first report, last year, laid the foundation for rigorous in-depth research and analysis, focusing on the themes, issues, and opportunities affecting the sector and its performance. (For more, see our infographic on the ten trends that will define the fashion agenda in 2018.) This year, we are seeing real signs of change.

Fashion's growth outlook by region, and by category

Although the fashion industry appears to be turning a corner, the rebound is not being felt evenly across the globe. In fact, 2017 signals the end of an era, as the West will no longer be the global stronghold for fashion sales-more than half of apparel and footwear sales will originate outside of Europe and North America. The main sources of growth are emerging-market countries across Asia-Pacific, Latin America, and other regions; they are forecasted to grow at rates ranging between 5 and 7.5 percent in 2018 (exhibit). Meanwhile, the economic outlook in the mature part of Europe is stable, and fashion-industry sales growth is likewise expected to remain at a modest but steady 2 to 3 percent. In North America, while overall consumer confidence is strong, the impact of policy changes is uncertain, and markdown pressures, market corrections, and store closures continue. Here, we expect a modest growth of 1 to 2 percent. Not surprisingly, this regional divide is reflected in fashion executives' sentiments, as respondents to the BoF-McKinsey Global Fashion Survey from emerging countries are more optimistic about the industry's outlook in 2018 than their European or North American counterparts.

The outlook for the fashion industry varies across different value segments, too. The industry continues to polarize: consumers are trading away from the midmarket price points even while the luxury, value, and discount segments are picking up speed. When it comes to categories, the improvement of fashion-industry sales is reflected in stronger sales growth forecasts across the board, including apparel and footwear. Handbags and luggage, and to some extent watches and jewelry, are returning slowly to their historic highs, driven by demand in Asia-Pacific. Athletic wear is the only category where record growth rates look to slow down slightly in 2018, as the "athleisure" trend has reached its peak in some mature markets. Nonetheless, this is still expected to be the fastest-growing category, with continued strong demand in many markets.

Shifts among consumers

These developments take place at the same time as the fashion industry goes through other transformative shifts. Mainstream customers are moving into a decisive phase of digital adoption, and online sales of apparel and footwear are projected to grow rapidly. Consumers in Southeast Asia spend about eight hours a day online on average. The modern shopper's comfort with digital channels and content has created a complex customer journey across online and offline touchpoints. But regardless of touchpoint, consumers expect a consistent brand experience across channels. Consumers also have higher expectations of customer experience and scrutinize convenience, price, quality, and newness. Digital-first companies such as Alibaba, Amazon, Net-a-Porter, and Zappos continue to force fashion companies to provide an even more premium experience. Many consumers today expect perfect functionality and immediate support at all times, coupled with rapid delivery times as players constantly compete to expedite products.

Customers' attention is also tuned to new channels. This has a profound impact as purchase decisions are influenced by social media, peer reviews, influencer marketing, and traditional marketing, and even many purchases themselves are made consumer-to-consumer. With information and the ease of comparison at their fingertips, consumers are becoming less brand loyal among millennials, two-thirds say they are willing to switch brands for a discount of 30 percent or more. Shoppers are also becoming more selective. More and more, they base their purchase decisions on whether a company's practices and mission aligns with their values-while at the same time they are highly price sensitive.

So consumers expect it all: convenience, quality, values orientation, newness, and price. In response, leading fashion players are offering innovative business models, using granular customer insights as a source of differentiation, and pushing the limits of go-to-market times. Sales of the traditional fast-fashion sector have grown by more than 20 percent over the last three years, and new online fast-fashion players are gaining ground. To keep up, leading fashion players are accelerating their speed from design to shelf. This "need for speed" is driven partly by social media accelerating the movement of fashion trends to the masses, and by industry leaders using analytics and customer insights to meet customer needs better and increase responsiveness.

But speed and flexibility bring added complexity. Shortening lead times requires major changes to the traditional business model and supply chain, and a shift in focus to a customer-centric model. Laggards face increased fashion risk and excess inventory if they fail to match customer demand. Frontrunners are building agile supply chains supported by higher-quality consumer insights-with the frontier being close to a real-time supply chain fed by "test and learn" and data analytics.

In the light of all this change, the performance gap between frontrunners and laggards continues to widen: from 2005 to 2015, the top 20 percent of fashion companies contributed 100 percent of the industry's entire economic profit; in 2016, the top 20 percent's contribution had increased to 144 percent.

The challenges of a fundamentally changing industry and a continued unpredictable macroeconomic environment has led fashion players to toughen up. Industry players are coming to accept unpredictability as the new norm, and fashion executives will in 2018 respond by focusing their energy on improving what is within their control. For those leaning forward and willing to help design the new features of the modern fashion system, the opportunities at hand to truly connect with fashion consumers across the globe have never been greater.

Download The State of Fashion 2018, the full report on which this article is based (PDF-3 MB).
ABOUT THE AUTHOR(S)
Johanna Andersson is a consultant in McKinsey's Stockholm office, where Sara Kappelmark is a partner; Achim Berg is a senior partner in the Frankfurt office, Martine Drageset is a consultant in the Oslo office, and Saskia Hedrich is a senior expert in the Munich office. Imran Amed is the founder, editor-in-chief, and CEO of the Business of Fashion.

Fashion is one of the past decade's rare economic success stories. Over that period, the industry has grown at 5.5 percent annually, according to the McKinsey Global Fashion Index, to now be worth an estimated $2.4 trillion. In fact, not only does it touch everyone, but it would be the world's seventh-largest economy if ranked alongside individual countries' GDP.

Yet 2016 was one of the industry's toughest years. Terrorist attacks in France, the Brexit vote in the United Kingdom, and the volatility of the Chinese stock market have created shocks to the global economy. At the same time, consumers have become more demanding, more discerning, and less predictable in their purchasing behavior, which is being radically reshaped by new technologies. It's against this backdrop that McKinsey has teamed with the Business of Fashion to shine a light on the fragmented, complex ecosystem that underpins this giant global industry.

2016: A year to forget

Our first The State of Fashion report (PDF-8MB) finds that it's not only external shock waves that have roiled the industry. Companies have also been looking inward, implementing changes to the core operations that are reshaping the entire fashion system, from shortening the length of the fashion cycle to integrating sustainable innovation into the core product-design and manufacturing processes. Perhaps unsurprisingly, 67 percent of executives said conditions for the fashion industry have worsened over the past 12 months.

This fact is clearly borne out in the industry's financial performance. Sales growth seems set to slow to a mere 2 or, at most, 3 percent by the close of 2016, with stagnating profit margins. Speculation and uncertainty over the repercussions of the US election outcome could further dampen consumer sentiment and affect sales. This is in stark contrast to the fashion industry's performance over the previous decade, which saw the industry expand at 5.5 percent annually.

Yet this sluggish overall growth masks some big winners: affordable luxury, value, and athletic wear.

With respect to sales growth, the affordable-luxury and value sectors have outperformed all other segments by one to one-and-a-half percentage points. This is consistent with their compound annual growth rate (CAGR) over the past three years, which has been 9 percent for affordable luxury and 6 percent for value, the highest of any segment since 2013.

Affordable-luxury players benefited from consumers trading down from luxury, particularly among Chinese consumers. However, their profit margins are expected to decline, especially after 2016, because of a pricing-arbitrage disadvantage across geographies and fluctuating foreign-exchange rates.

The value segment continued to grow in 2016, particularly as a consequence of large global players expanding geographically. With its clearly defined value proposition, the value segment has been taking share from discount this year.

In 2016, the 8.0 to 8.5 percent growth for athletic wear is more than double any other category. This is consistent with its 10 percent CAGR of the past decade, driven by consumers' more active lifestyles, the rise of "athleisure," emerging brands in the high-end segments, and product innovations. As athletic wear continues to grow, it will become a category with the ability to compete on equal terms with clothing and footwear, particularly in the midmarket and premium segments.

2017: Glimmers of recovery

So what will change in 2017? No one would put money on volatility and uncertainty lessening. Nonetheless, our report finds that fashion companies are hopeful they can improve their performance through a combination of organic growth and leveraging new technologies. Successful companies will invest more to nurture local clientele: 2017 will be the year of organic growth by deepening relationships with existing clients, rather than through geographic, channel, and store-network expansion. And digital innovation will go behind the scenes: digitization will be the key to supply-chain efficiency, lowering procurement costs, and the enhancement of sourcing opportunities.

Some 40 percent of executives we interviewed expect conditions for the fashion industry to improve in 2017, compared with the 19 percent who reported improving conditions in 2016 (exhibit). This is particularly true for the major players within each of the market segments and product categories. Many of them have already undertaken significant cost cutting and restructuring, and they are now primed to capture the benefits.

All things considered, we expect fashion-industry growth will increase to 2.5 to 3.5 percent in 2017, although the days when the industry outpaced GDP growth by as much as two percentage points seem over. A return to the riches of the previous decade appears unlikely. But equally, there is no call for rags just yet.

Performance will vary depending on the individual dynamics of specific market segments and categories. Value and affordable luxury will probably be the big winners, both outpacing the industry average at a projected 3.0 to 4.0 percent and 3.5 to 4.5 percent growth, respectively. That said, almost all other market segments should see a slight improvement in sales growth of half to one-and-a-half percentage points. Only the discount segment is likely not to be part of the recovery trend.

Product categories are expected to grow in line with the overall industry average, but the biggest winners will be those companies with coherent channel strategies and clear value definitions. Athletic wear is set to become the absolute category champion, maintaining 6.5 to 7.5 percent sales growth, although it will be unable to reproduce the double-digit growth of the past. The affordable-luxury segment seems likely to continue benefiting from consumers trading down from luxury, while signs point to the continued growth of the value segment as large global players expand internationally.

In short, the industry next year has an opportunity to stabilize and reset, and success stories will probably be written by those already planning for the year ahead. They should bear in mind the three trends that we believe will shape the 2017 fashion industry: the global economy, consumer behavior, and the fashion business model.

Economically, we see a number of trends that will shape the industry, including fashion's response to intensifying volatility, continued challenges in China, and the rise of urban centers. To address consumer behavior, players will have to learn to serve shrewder and more-demanding customers and adjust to a shifting demographic profile. Finally, 2017 will also be a critical year for the fashion business system, with developments expected around the fashion cycle, technological advancements, and a shake-up in the ownership of fashion companies, as players restructure and industry outsiders step up their activities in the fashion sector.

The bottom line is that amid this uncertainty and change, our analysis suggests cautious optimism is warranted. It's a sentiment shared by industry executives: 40 percent expect conditions for the industry to improve in the year ahead. As with everything in this fast-moving sector, we'll just have to wait and see.

This is an edited excerpt from the first joint report from McKinsey and the Business of Fashion, The State of Fashion (PDF-8MB).

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The State of Fashion 2021: In search of promise in perilous times

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With the COVID-19 pandemic dominating thoughts and minds, fashion executives are planning for a range of scenarios and hoping for a speedy global recovery. However, amid increasing pressure on performance, shifting consumer behaviors, and accelerating demand for digital, there is an imperative to act decisively to prepare for the next normal.

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As the need to address climate change becomes more urgent, industry sectors are working to reduce their carbon emissions. Fashion makes a sizeable contribution to climate change. McKinsey research shows that the sector was responsible for some 2.1 billion metric tons of greenhouse-gas (GHG) emissions in 2018, about 4 percent of the global total. To set that in context, the fashion industry emits about the same quantity of GHGs per year as the entire economies of France, Germany, and the United Kingdom combined.

Despite efforts to reduce emissions, the industry is on a trajectory that will exceed the 1.5-degree pathway to mitigate climate change set out by the Intergovernmental Panel on Climate Change (IPCC) and ratified in the 2015 Paris agreement. To reach this pathway, fashion would need to cut its GHG emissions to 1.1 billion metric tons of CO ₂ equivalent by 2030. But our growth calculations, adjusted to take into account the likely impact of COVID-19, show that the industry is set to overshoot its target by almost twofold, with emissions of 2.1 billion metric tons of CO ₂ equivalent in 2030, unless it adopts additional abatement actions (Exhibit 1).

To gain a deeper understanding of fashion's carbon emissions and identify additional abatement efforts the industry could pursue, we examined the entire value chain from farms and factories to brands and retailers to policy makers, investors, and consumers (see sidebar, "Our methods and assumptions"). Our findings show that all participants in all parts of the value chain have a role to play in driving decarbonization and bringing about real and lasting change for the better in the fashion industry.

Accelerated abatement

One of the challenges fashion faces in reducing its GHG footprint is the likelihood that shifting population and consumption patterns will drive continuing industry growth. A predicted rise in volumes could push carbon emissions to around 2.7 billion metric tons a year by 2030 if no abatement actions are taken. However, if the industry continues to embrace decarbonization initiatives at its current pace, it will cap emissions at around 2.1 billion metric tons a year by 2030, roughly the same as they are today. Yet even with these efforts, emissions would reach almost twice the maximum level that would allow the fashion industry to follow the 1.5-degree pathway.

To reach the 1.5-degree pathway, the industry would need to intensify its abatement actions and scale up existing decarbonization efforts to reduce annual emissions to around 1.1 billion metric tons in 2030, roughly half of today's figure. Some 60 percent of the additional emission reduction under this accelerated abatement scenario could be achieved in upstream operations, through initiatives such as energy-efficiency improvements and a transition to renewable energy, with support from brands and retailers. Another 18 percent of emissions could be saved through operational improvements by fashion brands, and a further 21 percent through changes in consumer behavior. Together, these efforts could reshape the fashion landscape.

The good news for the fashion industry is that many of the actions required for accelerated abatement can be delivered at modest cost. Almost 90 percent of the measures we identified would cost less than $50 per metric ton of GHG emissions abated. What's more, around 55 percent of the measures would lead to net cost savings for the industry.

The remaining actions would require incentives to shape consumer demand or regulations to deliver abatement. Up-front capital would be needed to fund 60 percent of the abatement measures.

Given their potential to act as the main drivers of accelerated abatement, brands and retailers face a call to collaborate with others in the value chain to invest for long-term social and environmental benefits. Not only can they effect change in their own operations but they can also support decarbonization efforts elsewhere in the industry and help consumers make more sustainable purchasing choices.

Priorities for industry participants

Our analysis identified a need for concerted action in three key areas:

Reducing emissions from upstream operations. Manufacturers and fiber producers could deliver 61 percent of the accelerated abatement we identified by decarbonizing material production and processing, minimizing production and manufacturing waste, and decarbonizing garment manufacturing. Improvements in energy efficiency and a transition from fossil fuels to renewable-energy sources could deliver about 1 billion metric tons of emission abatement in 2030 across the fashion value chain.

Reducing emissions from brands' own operations. The main contributions brands could make to emission abatement are to improve their material mix (for instance, through greater use of recycled fiber), increase their use of sustainable transport, improve their packaging (with recycled and lighter materials), decarbonize their retail operations, minimize returns, and reduce overproduction (only 60 percent of garments are currently sold without a markdown). If brands followed the measures we have identified, they could achieve 308 million metric tons of CO ₂-equivalent abatement in 2030.

Encouraging sustainable consumer behavior. The adoption of a more conscious approach to fashion consumption, changes in consumer behavior during use and reuse, and the introduction by brands of radically new business models could contribute 347 million metric tons of emission abatement in 2030. The main levers in this effort are an increase in circular business models promoting garment rental, resale, repair, and refurbishment; a reduction in washing and drying; and an increase in recycling and collection to reduce landfill waste and move the industry toward an operating model based on closed-loop recycling.

Policy makers and investors also have important parts to play in these efforts. Governments and regulators should promote sustainable practices and conscious consumption, and provide incentives to support decarbonization measures with high abatement potential. Investors can make their contribution by encouraging decarbonization initiatives, emission transparency, and sustainability-focused innovation among the companies in their portfolios.

Stepping up

Accelerating emission abatement through the actions identified in our analysis calls for bold commitments from stakeholders across the value chain. These commitments need to be supported by equally bold actions, greater transparency, increased collaboration, and joint investment.

After 2030, the challenge becomes still greater. To stay on the 1.5-degree pathway, fashion will need to go beyond the accelerated abatement envisaged in our analysis and deploy all its ingenuity and creativity to decouple value creation from volume growth.
The report on which this article is based is part of a multiyear strategic-knowledge partnership between the Global Fashion Agenda and McKinsey & Company. The partnership aims to present research and a fact base on the priorities of CEOs and to guide and mobilize industry players in taking bold action on sustainability. Download the full report (PDF-1.5MB).

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As the need to address climate change becomes more urgent, industry sectors are working to reduce their carbon emissions. Fashion makes a sizeable contribution to climate change. McKinsey research shows that the sector was responsible for some 2.1 billion metric tons of greenhouse-gas (GHG) emissions in 2018, about 4 percent of the global total.

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The COVID-19 pandemic is simultaneously an unprecedented health crisis and a global economic shock. Amid the pandemic, the apparel, fashion, and luxury (AF&L) industry has moved quickly to address urgent public-health needs-closing stores, manufacturing much-needed items such as face masks and hand sanitizer, and making donations to healthcare and community organizations. At the same time, AF&L companies are grappling with COVID-19's business ramifications, including widespread job losses in an industry that provides livelihoods for millions of people worldwide.

Although no one in the industry foresaw the intensity of this crisis, some fashion companies are finding that they are better equipped than others-largely because of their digital know-how. In this article, we touch on COVID-19's impact on the AF&L industry to date. We then propose a set of actions that AF&L companies can take to build their digital and analytics capabilities-not just to ensure business continuity and minimize the downside of COVID-19, but also to emerge from the crisis in a position of strength.

A deepening digital divide

Our consumer-sentiment surveys, conducted in April, show declines in purchase intent of 70 to 80 percent in offline and 30 to 40 percent in online in Europe and North America, even in countries that haven't been under full lockdown. E-commerce is clearly not offsetting the sales declines in stores. Nevertheless, it has been a lifeline for fashion brands as stores have been shuttered-and it will continue to be critical during and after the recovery period. In China, the return of offline traffic has been gradual, with 74 percent of Chinese consumers saying they avoided shopping malls in the two weeks after stores reopened. This suggests that some percentage of offline sales could permanently migrate to e-commerce.

Digital is not only an increasingly important sales channel; it can also help companies adapt cost structures and make each step of the value chain better, faster, and cheaper. For example, digitization can enable new logistics and sales-fulfillment options (such as click-and-collect and drive-through), fuel innovative ways of customer acquisition, and help predict and manage inventory to create a more resilient supply chain. The fundamental enabler to all this will be data-the transparency, governance, and accuracy of which have never been more important.

This all portends a deepening digital divide. Even before the crisis, companies that were digitally and analytically mature outperformed competitors that hadn't built robust digital and analytics capabilities (Exhibit 1). The COVID-19 crisis has only widened the gap between industry leaders and laggards. For leaders with the ability and willingness to invest, the pandemic has clearly been an accelerator. As a top executive of a leading apparel player recently declared, "We've accomplished two years of digital transformation in two months."

Thus, for executives in the AF&L sector and all related subsectors (such as beauty products and sporting goods), the imperative is clear: make digital and analytics a core element of your company's strategy.

A number of trends in the post-COVID-19 world-the " next normal "-could make digital and analytics play an even more important role. Physical distancing could continue, making consumers less likely to visit brick-and-mortar stores, and a contact-free economy could emerge-raising e-commerce and automation to a new level.

The implications of these trends will differ for each company, depending on its digital starting point and strategic orientation. Digital and analytics leaders (companies in which online sales account for 30 to 40 percent of total sales, parts of the value chain are significantly digitized, and online and offline channels are integrated to some degree) have an advantage today but could quickly lose it if other players accelerate their transformation. On the other hand, laggards (companies with less than 20 percent of total sales coming from the online channel, low digitization levels across the value chain, and siloed online and offline operating models) have an opportunity to make an "all in" bet on digital and analytics-and perhaps gain market share with smaller capital-expenditure investments, which used to be a limiting factor for many brands.

That said, digitization won't be a panacea. Companies should direct investments to areas in which the highest business value lies-which might not be in sales but rather elsewhere in the value chain. Equally important, companies should avoid "gold plating," aiming instead for the fastest minimum viable digital solution that will achieve the business goal. Finally, the sequencing of initiatives will play a big role in making a company's digital transformation as self-funding as possible.

Navigate the now: Immediate priorities

The health and safety of employees and customers, of course, has been-and remains-the absolute priority. By now, AF&L companies have closed stores, introduced new hygiene and safety processes in warehouses and distribution centers, and set up digital tools for remote working and collaboration. Although the situation remains uncertain and is evolving daily, there is a clear set of actions involving digital and analytics that AF&L players should implement now to keep the business going, stem sales losses, and plan the comeback.

Engage with customers in an authentic way

Email, social media, and other digital channels have seen significant spikes in usage during the crisis (Exhibit 2). AF&L brands must therefore continue to communicate frequently with consumers, even if most consumers aren't currently spending. Use digital channels to launch genuine, purpose-driven communications regarding health, safety, business continuity, and community building. If you decide to send consumers relevant content, be sure to do so in an appropriate and empathetic tone (for example, a global sports-apparel player now offers yoga lessons on Instagram).

Whether it's a personalized offer or outreach from a personal stylist, the best brands are maintaining customer relationships even while stores are closed. Staying in touch with your most loyal customers doesn't just keep your brand on top of mind but also helps to boost sales. On a leading Chinese e-commerce platform, transaction volume for fashion-brand miniprograms (brand-powered apps embedded within the platform's interface) more than doubled between January 2020 and February 2020, during the peak of China's outbreak.

Refine and scale up your online operation

We expect the online share of fashion and apparel in Europe and North America to increase by 20 to 40 percent during the next 6 to 12 months. In April, traffic to the top 100 fashion brands' owned websites rose by 45 percent in Europe. Some of the larger players have even reduced their promotion intensity to be able to handle the volume of orders.

Delivering an excellent customer experience online is crucial, so reallocate your resources and shift management attention from offline to online. Also, scale up capabilities in both demand generation and fulfillment (Exhibit 3). Seek to eliminate points of friction in every part of the online customer journey-for example, by improving your website's search function and expanding your online assortment. Some retailers have redeployed store personnel from closed stores to support online fulfillment or to assist consumers via digital call centers.

While most AF&L players already have an e-commerce presence, some still don't. Companies without one can launch a basic online platform in 10 to 15 weeks. A private-equity-backed retailer did it in 13 weeks (Exhibit 4).

Prioritize digital-marketing levers as demand rebounds

In anticipation of a shift toward online sales, allocate more of your marketing budget to digital channels. Establish or improve your digital-marketing "war room" and increase its visibility in the organization-for instance, by establishing a C-level digital-performance dashboard that provides a cross-channel view of e-commerce, customer relationship management, and social media, thus enabling rapid identification of opportunities for efficiency optimization or growth.

Retrain your look-alike models to capture value from the new consumer segments and behaviors that have emerged during the crisis. Upgrade your digital-marketing activity to be best-in-class-for example, by adding sophisticated imagery to your social-media posts and conducting "social listening" to inform the development of new services and offers.

Use granular data and advanced analytical tools to manage stock

The value of excess inventory from spring/summer 2020 collections is estimated at €140 billion to €160 billion worldwide (between €45 billion and €60 billion in Europe alone)-more than double the normal levels for the sector. Clearing this excess stock, both to ensure liquidity and to make room for new collections, will become a top priority.

At the best-performing companies, an "inventory war room" uses big data and advanced analytics to first simulate dynamic demand scenarios specific to locations (channel, country, store) and SKUs, then to synthesize the resulting inventory risk-thus enhancing decision making. The war room decides, for example, whether to redistribute SKUs, transfer inventory to future seasons, or accelerate markdowns (Exhibit 5). A company's investments in developing advanced analytical tools to steer markdowns during the crisis will pay off almost immediately.

Optimize costs using a zero-based approach

In light of crisis-related sales decreases, cutting costs is an obvious imperative for most companies. However, reducing all budget lines across the board is risky. We recommend a zero-based budgeting approach instead.

Identify two categories of projects: critical projects linked to core digital and analytics priorities that must proceed as planned or at a slightly lower speed (for example, building a new data lake to enable personalized marketing) and core projects that can be delayed (such as those that don't enable emergency response). Continue only the projects that fall into those two categories; stop all others. A range of savings levers-such as vendor renegotiations and tactical moves to the cloud-can help dramatically reduce your operating costs. Reset your digital and analytics priorities and budget and adapt them to a post-coronavirus world.

Shape the next normal: Longer-term strategic actions

Although time frames remain uncertain for now, AF&L players should start planning how they'll compete in-and perhaps even influence-the industry's next normal. Consumer habits, companies' interactions with consumers, and the number and types of touchpoints will all change. The requirements for supply-chain speed and flexibility will continue to increase. Digital and analytics will play a critical role in helping companies emerge stronger from the crisis.

Set an ambitious aspiration and define a clear road map

A digital and analytics transformation is typically an 18- to 24-month journey, requiring an ambitious aspiration, a clear plan, and concrete milestones. In our experience, successful digital and analytics transformations have the following elements in common:

Strong support (or even direct sponsorship) from the CEO during the entire journey.

A pragmatic approach that starts with an understanding of the consumer and the drivers of value creation; digital for digital's sake will not deliver results.

A clear road map and prioritization of initiatives, combining actions that help set up the enablers for the organization with the implementation of use cases that generate quick wins.

A focus on getting to a minimum viable product (MVP) within two to three months-a rapid timeline that allows the company to iterate while generating value, avoiding large up-front investments.

A central team to monitor value capture. This team also helps build the road map by scanning opportunities, allocating budgets, and coordinating implementation, ensuring that all efforts are focused on delivering tangible impact rather than gold plating.

Well-defined key performance indicators (KPIs) to measure success.

The first step in the transformation program should be the definition of digital priorities, which will differ based on each company's business model and digital starting point. Digitization is much more than just selling online; a quick diagnostic may be required to select and align on key value areas.

Typically, digital and analytics priorities can be categorized according to their place in the value chain: customer experience (front), distribution and supply chain (middle), and product development and support functions (back). Exhibit 6 shows high-impact use cases in each of these three areas.

Provide an excellent omnichannel experience

The pandemic has elevated digital channels as a must-have for AF&L players. Therefore, take this opportunity to leapfrog into the digital arena by making it the center of your operating model: move your traffic- and engagement-generation engine to digital, and leverage digital channels to drive store traffic and vice versa.

Besides scaling up digital sales efforts, reconfigure your store footprint accordingly-for example, by reducing presence in "B" areas (markets with lower population density and lower profitability per square meter), devoting less store space to product categories with high online penetration, experimenting with innovative formats (such as drive-through windows or pop-up stores), and making it easy for customers to perform any omnichannel operation, including complex ones (such as buying online from a store if the product isn't in stock there, and then picking it up from another physical store in the next 12 hours). Use data and analytics to tailor the assortment in each store and to streamline and optimize assortments overall.

In our experience, fully integrated management of stock in stores and warehouses is core to any omnichannel operation. Making all stock (even stock shortly arriving to warehouses) visible to customers in any channel has proved to boost sales.

Bet on personalization

Personalization has helped several industry players achieve 20 to 30 percent increases in customer lifetime value across high-priority customer segments. It has proved even more valuable in subsectors with more stable and predictable purchasing patterns, such as beauty products.

Use cases for personalization have mostly centered on personalized offers, personalized promotions and benefits (such as access to new products), and reductions in generic traffic-generation costs. To go further, add personalization capabilities to your digital war room-for example, by collecting and analyzing all the available data to generate detailed insights about your customers. Build actionable microclusters based on customer behavior. For instance, entice the highest spenders with special incentives (such as triple loyalty points for purchases of at least $1,000), target customers who tend to buy in the categories where you have the largest inventory buildup, and give online customers coupons to redeem in-store once physical stores reopen.

Prioritize use cases based on your business context, advanced-analytics capabilities, and customer segments. Create a prioritized use-case road map and a technology-investment plan. Integrate personalization into all delivery channels to ensure consistency in your customer communications.

Leverage big data and analytics to manage the supply chain

Digital and analytics can not only drive top-line growth but also significantly improve speed, cost, flexibility, and sustainability across the supply chain. For instance, some leading companies are using radio-frequency identification (RFID) to track products more precisely and reduce in-store merchandising manipulation. Companies' RFID investments typically yield operations simplifications and service-level improvements.

In addition, automating logistics through digital warehouse design and predictive exception management can significantly increase efficiency. The benefits will flow to consumers as well-in the form of better product availability and faster, cheaper, and more accurate deliveries. Leading online players, for example, are using models powered by artificial intelligence (AI) to predict sales of specific products in certain neighborhoods and cities, then stocking the predicted amount of inventory in nearby warehouses.

Digitize product development and support functions

During the COVID-19 crisis, the digitization of product development has proved to be a competitive advantage. Companies that were already using cutting-edge tools such as 3-D product design, virtual sampling, digital material libraries, and AI-supported planning have fared better than their peers during the crisis. Their designers and merchandisers can react faster to market trends, significantly reduce both sample costs and time-to-market, and collaborate remotely across teams. The past several weeks have shown that it's possible to do much more on this front than some in the industry initially thought. Indeed, the pandemic may have shattered historical preconceptions and biases against digitization in core product-development processes.

Digitization of support functions is another key lever for improving efficiency. By automating repetitive tasks in back-office functions such as indirect purchasing, finance, legal, and HR, you can simultaneously reduce costs and free up time and resources to reinvest in more valuable activities. Companies that have automated their finance processes-such as claims collection and financial reconciliation-have found that they've also increased the agility and accuracy of these processes while capturing significant synergies. Speed up the digitization of all support functions through robotic process automation and other leading-edge technologies.

Build data and tech enablers to support your transformation

Technical enablers play a key role in powering digital and analytics growth. In our experience, three core principles are the most relevant:

Use cloud infrastructures to sustain scaling and to access best-in-class services, particularly for use cases that best benefit from the cloud's features (for instance, data consumption across the globe, very high storage and processing needs).

Think data from the start. Build solid data foundations as part of every digital and analytics initiative in a way that allows rapid scaling and forward compatibility. Design and build out pragmatic data governance focused on enabling business value by helping to ensure data breadth, depth, and quality. Establish a strong data culture and ethics.

Design your technology stack for faster integration and development, with applications broken down into microservices and isolated through the use of application programming interfaces; use unified DevOps toolchains to enable automation and reduce time-to-market to a matter of hours instead of weeks.

These enablers shouldn't become causes for delay. Rather, they should follow the same agile timelines and sprints as the core initiatives. Implementation should be pragmatic and clearly linked to value generation.

Attract and retain top digital talent

After the crisis, financially stable companies may be able to attract top-notch digital talent, including in-demand profiles such as digital-marketing specialists, data scientists, data engineers, user-experience and user-interface designers, and software and data architects. Retaining these kinds of employees will require AF&L companies to develop new talent processes-with tailored initiatives in recruiting, career growth, learning and development, and performance management-specifically for engineering and digital talent, similar to what many fashion players already do for designers and creative directors.

In addition, AF&L players should adopt agile ways of working to speed up development of digital and analytics products and projects. Agile techniques enable companies to release MVPs into the marketplace quickly and refine them iteratively based on consumer feedback.

There's no denying that the COVID-19 pandemic will make for a difficult 2020. For some AF&L companies, even survival may be a struggle. However, if they lead with empathy and undertake bold actions in digital and analytics-particularly around e-commerce, data-driven stock management, and digitization of key functions-we believe they can not only endure the crisis but also build competitive advantage and strengthen their business for an omnichannel, digital-centered next normal.

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Fashion's digital transformation: Now or never

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The COVID-19 pandemic is simultaneously an unprecedented health crisis and a global economic shock. Amid the pandemic, the apparel, fashion, and luxury (AF&L) industry has moved quickly to address urgent public-health needs-closing stores, manufacturing much-needed items such as face masks and hand sanitizer, and making donations to healthcare and community organizations.

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Amid the coronavirus pandemic, every company's first priority is, of course, to protect the health and safety of employees, consumers, and business partners. Indeed, luxury companies have pivoted to address urgent public-health needs: factories that produced scarves and perfume now manufacture face masks and hand sanitizer, and many luxury groups have made monetary donations to hospitals and other not-for-profit organizations. At the same time, with millions of people relying on the luxury-goods industry to make a living-from factory workers and retail-store employees to small-town artisans and craftsmen-industry leaders are planning ahead and wrestling with longer-term strategic questions to ensure the survival of their businesses.

In this article, we discuss the impact of the crisis on the luxury-goods sector. We then recommend two sets of priorities for industry executives: short-term actions for "navigating the now" and longer-term considerations for shaping the future.

A hard reset or a short-term blip?

While it's too early to quantify COVID-19's total financial toll on the sector, the pandemic has certainly shaken some of the foundational aspects of the luxury industry-and some of these changes could be permanent.

Wholesale Darwinism. Even before the pandemic struck, independent luxury-goods wholesalers in Europe (many of which are small, family-owned boutiques) and some of the large North American luxury department stores were already struggling-in part because of luxury brands moving to vertical integration over the past 20 years and, more recently, the growth of e-commerce. This pandemic might force some of them out of business. The damage could extend to brands that have not yet fully transitioned to a vertically integrated distribution model, as well as to upstart brands that need wholesale channels to reach new customers and to finance the development of their full collections. To survive, wholesalers are likely to adopt aggressive commercial and discount policies-which, at least in the medium term, could hurt the luxury positioning of brands that don't have a concession model.

From global traveler to local shopper. The luxury sector appeals to a global consumer: 20 to 30 percent of industry revenues are generated by consumers making luxury purchases outside their home countries. In 2018, Chinese consumers took more than 150 million trips abroad; we estimate that purchases outside the mainland accounted for more than half of China's luxury spending that year. Asian shoppers buy luxury goods outside their home countries not only to benefit from lower prices in Europe, but also because shopping has become an integral part of the travel experience: buying a brand in its country of origin comes with a sense of authenticity and excitement. With the recent travel restrictions, an important driver of luxury spending has come to a halt, and we anticipate only a gradual ramp-up in international travel, even after the restrictions are lifted. That said, Chinese consumers remain the biggest growth opportunity for the luxury sector. Brands, clearly, will need a new approach to attracting luxury shoppers. To reactivate Asian luxury consumers in their home countries, brands can focus on creating tailored local experiences, strengthening their digital and omnichannel offerings, and engaging more deeply with consumers in tier-two and -three cities. The latter will be challenging, given the limitations in both retail infrastructure and customer-service capabilities in those cities.

Shows without live audiences. Fashion weeks and trade shows have been essential ways that brands have maintained vibrant relationships with consumers and trade partners. While we expect some return to normalcy on this front, we also believe that the luxury industry-in close collaboration with fashion-week organizers and trade associations-should explore alternative ways to deliver the same kind of magic that these events offer when there are restrictions on international travel and large gatherings. Industry players might also consider pushing for a coordinated revamping of the fashion calendar, with brands simplifying and streamlining their presentation calendars.

From ownership to experience, and back again. "Experiential luxury"-think high-end hotels, resorts, cruises, and restaurants-has been one of the most dynamic and fast-growing components of the luxury sector. Millennials (those born 1980-95) opted more for experiences and "Instagrammable moments" rather than luxury items. Baby boomers (born 1946-64), too, were moving in this direction, having already accumulated luxury products over the years. While we expect the positive momentum of experiential luxury to persist, it will slow down in the short term as consumers temporarily revert to buying goods over experiences.

Hyperpolarization in performance. Even before the crisis, it made little sense to talk about the sector in terms of averages because growth rates and profit margins were so widely spread out. Even within the same segment and price point, luxury brands' growth varied from 40 percent to negative percentages, and earnings from 50 percent to single-digit percentages. We expect further polarization based on three fundamentals: the health of a brand's balance sheet prior to the crisis, the resilience of its operating model (including its digital capacity, the agility of its supply chain, and its dependence on wholesale channels), and its response to COVID-19.

Another chance for 'rare gems.' Over the past decade, European luxury conglomerates, private-equity firms, and, more recently, US fashion groups and Middle Eastern investors eagerly snapped up attractive acquisition targets. As a result of the current crisis, some of these acquirers-particularly those that aren't luxury companies themselves-could find that they have neither the core competencies nor the patience to nurture these high-potential brands, and thus might be willing to put them back on the market. Acquisitions that were once forbiddingly expensive could become viable in the postcrisis period. Such developments could result in further industry consolidation or even the formation of new luxury conglomerates.

Time and again, the luxury industry has proved capable of reinvention. We are confident about the sector's long-term potential. But some brands will emerge from the crisis stronger, while others will struggle to preserve the integrity of their business. Much will depend on their ability to respond to the short-term urgencies related to COVID-19 while simultaneously planning and executing for the future.

'Navigating the now': Immediate priorities

Many luxury executives have demonstrated caring leadership during this crisis. They are prioritizing the safety of employees and customers and proactively communicating with all stakeholders about their new health and safety protocols, crisis-response activities, and the steps they're taking to keep operations running. At the same time, they must take quick action to ensure that their businesses weather the crisis. Here are short-term actions that company leaders should consider taking.

Review 2020 inventory and rethink 2021 collections. Sales for this year's spring season are as much as 70 percent lower than last year-not surprising, considering that consumers had little opportunity to explore the spring and summer collections in stores. Decide how to phase in the 2020 fall and winter collections and develop a plan for dealing with unprecedented levels of unsold 2020 inventory-without resorting to steep discounts, which jeopardize brand equity. Stay informed about wholesalers' and e-retailers' plans to clear extra inventory. In some cases, inventory swaps might be preferable to aggressive promotions and discounting. One way to use extra inventory could be to reward loyal customers with gifts or other types of giveaways to surprise and delight them, while also whetting their appetite to shop across collections or categories.

Enhance digital engagement. As stores remain closed in many parts of the world, e-commerce is a crucial channel for keeping sales up, communicating with customers, and forging a sense of community around a brand. Accelerate your digital investments and shift media spending to online channels, with a focus on customer activation rather than brand building. Aside from enhancing your own websites, also consider partnerships with reputable e-retailers. Digital marketing could help not only boost online sales but also entice consumers to visit stores once they reopen.

More than 40 percent of global luxury-goods production happens in Italy-and all the Italian factories, including small, family-based façonniers, have temporarily shut down.

Manage for cash. Set up a cash-control team, with representation from the procurement and sales teams, to examine spending and identify responsible reductions in cash outflow. Review lease contracts and all operating expenses, including marketing spending and events. At the same time, prepare to selectively support wholesalers and department stores by extending accounts-receivable terms and arranging inventory swaps. Work closely with government authorities on a country-by-country basis to find ways to alleviate cash strains with public measures.

Take a 'cleansheet' view of demand planning. Review your 2020 budget and inventory plans, assessing COVID-19's impact on each region and business unit. Adjust revenue and profit forecasts and create incentives for business-unit heads to set new targets. Resist the temptation to push sales at the expense of margins, as a sales-focused approach will likely yield inaccurate demand projections and, consequently, large amounts of unsold inventory.

Assess the strength of your supply chain. More than 40 percent of global luxury-goods production happens in Italy-and all the Italian factories, including small, family-based façonniers (a French term that loosely translates to "contract manufacturers"), have temporarily shut down. Luxury companies should assess, category by category and product by product, where the impact is likely to be felt most acutely. Potential short-term actions include moving inventory across regions and channels, privileging geographic markets that are less affected, and making sure to fulfill online orders. In the medium term, luxury companies should help production partners recover by making prompt payments and restoring production as quickly as possible. If Italy's façonniers do not survive, a signature element of the luxury ecosystem-the craftsmanship that is the result of excellence and skill passed down through generations, and the source of the "Made in Italy" aura-could be lost forever.

Adjust merchandising plans. As consumers' social routines adapt to lockdowns and physical-distancing restrictions, we are starting to see changes in buying behavior. For example, some luxury players report that, in terms of price points, high-end and low-end luxury items are proving more resilient than those in the middle of the range, perhaps due to a combination of "revenge spending" (a phrase that refers to pent-up demand for luxury items during or after crises) and a desire to maximize value for money by purchasing functional items. They're also seeing handbags and small leather goods selling better than ready-to-wear apparel during the crisis. Children's wear seems to be doing particularly well. Millennials haven't reduced their spending as much as other adult segments have. These are the observations of a few luxury players, but clearly there is no one-size-fits-all merchandising plan. Brands should carefully analyze sales data and embed consumer insights into their merchandising plans.

Shape the next normal: Longer-term considerations

Stabilizing the business during the crisis is crucial-but management must not lose sight of the longer term. Here are strategic actions to consider taking during the recovery.

Put digital at the center of your operating model. For many companies, this crisis has been a catalyst for developing and executing an online and omnichannel strategy. In China, e-commerce has attracted new customer segments and markets (exhibit); we can expect a similar pattern to play out in other geographies. Start by allocating a greater share of investment to the online channel. Explore new ways of partnering with established e-retailers. Step up your personalization efforts in digital marketing. Luxury consumers are accustomed to a high standard of service in stores; the emphasis, then, should be on creating a personalized digital experience of the same quality.

Build competencies related to resilience and transformation. For the past 30 years, the luxury sector has created value, thanks to its creativity and innovation. In addition to supporting core competencies such as design, marketing, and merchandising, luxury businesses now need to build the managerial talent to support the CEO in resilience and transformation. One possibility is to create a new C-suite position, the chief transformation officer, to emphasize the importance of these competencies.

Boldly reshape the ecosystem, including through M&A. Crises can create new avenues for growth. Companies should ask themselves questions such as: "Are there companies we could potentially partner with, both to keep them in business and to allow us to expand into adjacent markets or product categories? Are there moves along the value chain (such as vertical integration) that have become more attractive? What partnerships or acquisitions-perhaps in the technology arena-could we pursue now that were less viable before? What brands could we acquire to complement our portfolio or to initiate our journey toward becoming a larger luxury group?" As companies seek to form partnerships or make acquisitions, it will be important to consider not just economic rationales but social rationales as well: For example, could an M&A deal help a supplier in distress, save jobs in a struggling community, or strengthen the luxury sector for the longer term?

Anticipate shifts in consumer sentiment and behavior. Consumers are the ultimate shareholders of the luxury sector. We expect that, once conditions allow, consumers will want to resume their normal lives. However, the next normal might look quite different; luxury companies must try to anticipate and respond to whatever that next normal will be. For example, in our recent conversations with CEOs, one trend that is likely to intensify postcrisis is the trend toward sustainability and the desire for more-responsible consumption-reinforcing the need for companies to provide clear, detailed information about their processes and products. Experience also suggests that, after a large-scale crisis with a heavy emotional toll, consumer preferences could shift, at least for a time, toward "silent luxury"-paying more attention to classic elements, such as craftsmanship and heritage, and less to conspicuousness and "bling."

Digitize the end-to-end supply chain. Technology-from remote-working platforms to virtual showrooms-can help luxury companies maintain productivity during the crisis and, perhaps, even improve productivity for good. In addition, the commercial elements (such as virtual showrooms and digital prototyping and sampling) will be valuable in maintaining strong relationships with buyers, even during times when travel restrictions are in place. Digitizing the supply chain from end to end will, of course, require investment in innovative, leading-edge technologies.

While the COVID-19 pandemic has made for a challenging 2020, we are confident that, with careful planning and deft execution, the luxury-goods sector can successfully weather the crisis and emerge even stronger. The actions we've outlined here can help you and the other leaders in your organization navigate the challenges of today while building and strengthening your business for the longer term.

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A perspective for the luxury-goods industry during--and after--coronavirus

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Amid the coronavirus pandemic, every company's first priority is, of course, to protect the health and safety of employees, consumers, and business partners. Indeed, luxury companies have pivoted to address urgent public-health needs: factories that produced scarves and perfume now manufacture face masks and hand sanitizer, and many luxury groups have made monetary donations to hospitals and other not-for-profit organizations.

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As stores shutter across the globe and brands adjust orders to accommodate for the lack of business, the sudden decrease in sales has created an economic ripple effect in the supply chain of the fashion industry. Those who are at the bottom of the chain - the garment workers - have been left with little to no safety net for survival.

From Asia to Central America, the plight of the garment workers is a common theme in the business of fashion. While their struggles may differ throughout the world, every story highlights the growing need for accountability in an industry that often turns a blind eye to the individuals who serge the seams of prosperity that keep brands from unraveling.

The financial devastation of the coronavirus pandemic has left panic in its viral wake. As big brands are delaying payments and leaving invoices overdue , garment workers are left worrying about when or if they will be paid. Stephen Wishart, the Central America Director for Solidarity Center , shared with us the current conditions in Honduras, where garment workers are facing limited paid time off during factory shutdowns. The maquila workforce in Honduras accounts for more than 100,000 jobs in the country: 98,000 in the textile/garment sectors and 17,700 in the automobile harness industry. For many of these workers, time is running out.

Maria-Elena Sabillon, a labor rights attorney and program coordinator for Honduras at the Solidarity Center, shared information gathered from workers represented by FESITRATEMASH-CGT and FITH-CUTH. Sabillon said that the concern for the maquila workers in Honduras was how to stay afloat as factories remain closed. Labor unions negotiated two weeks of paid time off during the crises, which was a major victory for workers. Those two weeks expired as of Friday, March 27, however, and negotiations for a resolution are ongoing. Sabillon said that workers may need to use vacation time to ensure that the time off would not be unpaid. Maquila workers also could decide to strike.

"The vast majority [of workers] are not accepting the decision to draw down vacation time," Sabillon said. "Everybody is in a great deal of uncertainty."

As workers 'draw down' their vacation time, Sabillon noted that these days may pull from 2021, leaving workers with no vacation days for that entire year. There also is the uncertainty about how many garment workers in Honduras will be impacted. Negotiations occured between the heads of maquila unions with the maquila employers association, focusing on ensuring workers continue to receive pay while factories remain closed. Currently, individual unions and factories are negotiating.

"The ask is that workers receive a salary even if it's not a full wage during the quarantine," said Sabillon. "There should be funds from the government for workers who have to stay home."

While unions in Honduras are trying to negotiate fair wages while factories remain closed during the pandemic, in El Salvador maquila workers are in a battle against unemployment. According to Wishart, 70,000 El Salvadoran maquila workers are employed in the garment/apparel sector. As factories closed across the country, many workers were provided with a severance package and left with the understanding that their jobs were gone . This practice is common and is a way that factories may engage in union-busting.

"In the short term, there is not a lot we can do," said Norma Hernandez, Program Coordinator in El Salvador for Solidarity Center, who shared information from workers represented by FEASIES. "We are trying to open a dialogue with the Labor Ministry."

While many maquila workers are facing unemployment, there has been help from the government to provide them with a financial safety net and a bit of hope.

"The El Salvador government has authorized payments of $300 to low-income families," said Hernandez. "This will help keep families afloat."

Eventually factories will re-open in El Salvador and around the world. Yet, the continuity of business as usual has been disrupted because of the threat of Covid-19. In an industry that relies on constant production, the long-term effects of this dramatic halt could have a serious impact on the daily working conditions of maquila workers throughout Central America. When factories resume production, Hernandez said that the worry is that the expectations and demands from workers may be higher as brands will need to make up for lost time...and lost profits.

In other parts of Central America, some factories are still producing, perhaps to the detriment of workers' safety. Wishart stated that in Guatemala at least eight factories remained in operation. The conditions of these factories vary. The maquila workforce in Guatemala includes 68,000 garment workers.

"Five of the eight factories [that we are in contact with] are complying with the recommendations and requirements that the government has put in place such as having a nurse or doctor in the factory, providing hand sanitizer, providing masks, and providing private transportation for workers," said Wishart. "The remaining three...one is complying with most of it except for providing workers with private transportation. The other two are not complying with any of these recommendations and requirements."

The factories that have shuttered in Guatemala, however, are following a similar pattern as in Honduras, Wishart noted. Those that have closed are allowing workers to use vacation time as a means to continue to get paid. Like workers in Honduras, though, that paid time may be limited.

Garment factories in Asia have also been impacted by the sudden economic halt created by the Covid-19 crisis, and all the stories echo a similar theme of financial devastation. In Bangladesh, garment workers are facing the threat of receiving no payments for their work. Brands are slashing orders and delaying payments on invoices, and millions of workers are affected.

"Brands and retailers are postponing the delivery of completed garments from the current orders which have already been produced by apparel factories," said Mostafiz Uddin, owner/operator of Denim Expert, Ltd. "Furthermore, they are telling the manufacturers not to cut fabrics and process other raw materials which the manufacturer has already imported or stored for the current orders placed by their clients, which has hit the factories hard. According to the latest data, 880 apparel factories faced order cancellation/deferment so far on 777.5 million pcs of goods which worth US$ 2.46 billion and affecting around 1.79 million workers." These numbers continue to grow .

As many garment workers live on small wages that barely cover their living costs, the impact of delayed wages-or no wages-would be devastating. While the Prime Minister announced a stimulus package that would help provide a bit of financial relief, Uddin noted that the package is inclusive of all export industries-not just the garment workers. This means that funding will be stretched across sectors, and the relief might not be enough.

Uddin is urging brands to take ownership by providing timely payments to factories so that workers don't suffer financial devastation.

"Here brands and retailers should come forward and act responsibly as the apparel factories of Bangladesh have been serving them as a trusted partner for a long time. So instead of cancelling orders which some brands and retailers have resorted to now, they should take all the goods which are currently on production floors in different stages (cutting, sewing, finished, etc.) and make full payments for those as per contract," Uddin stated. "And for the orders against which fabrics are in house but not cut, and which were supposed to ship in three to fourr weeks time in a normal situation, buyers can pay at least CM (cost of making goods) price so that the factories can pay the salaries of their workers. Furthermore, the buyers should pay promptly for any orders instead of - in some cases - actually extending their payment terms. Prompt payment is vital for the factories at this moment for cashflow."

In many parts of the world, there is no clear answer as to when shelter-in-place orders will be lifted and businesses can return to normal. As weeks drag into months, garment workers who are forced to 'draw down' vacation time could be faced with no income. Others. Who don't even have this option, will be hit the hardest. If invoices remain unpaid by brands, this could wreak havoc on millions of garment workers across the globe.

Meanwhile, the brands and companies that have relied on the labor of garment workers for decades remain mostly silent, distancing themselves from accountability and closing off the borders of best practices. H&M has been one of few brands to take accountability (the company has promised to pay outstanding invoices, which will allow workers to receive their wages). Eva Argueta, who led collective bargaining efforts for maquila workers in Honduras, has been vocal that workers should not have to bear the brunt of the financial impact.

"Businesses are trying to borrow capital from workers through their wages and benefits," Argueta said. "Workers are not responsible for their employers' business losses, and it shouldn't be taken out of their wages and benefits."

If and when other major brands take responsibility for the ripped seams of their supply chain is still an unknown. Discussions are ongoing, strikes may be imminent. In the meantime, garment workers are left to fight for their jobs, their wages, and their survival.

Julie Kuenneke is a freelance writer and content creator with a passion for thrifting the latest trends and discovering the holy grail items buried beneath the rubbish. She's slightly addicted to coffee and always embraces Midwest Nice.

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How Coronavirus Is Impacting Garment Makers Globally - Remake

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As stores shutter across the globe and brands adjust orders to accommodate for the lack of business, the sudden decrease in sales has created an economic ripple effect in the supply chain of the fashion industry. Those who are at the bottom of the chain - the garment workers - have been left with little to no safety net for survival.

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The 2020 U.S. Census is expected to show that the nation is now the most racially and ethnically diverse it has ever been, with 7.6 million people defining themselves as multicultural (a 36% increase from 2010, and the largest racial percentage change this past decade).

It's no surprise generation Alpha (children born after 2010) is the most racially and ethnically diverse generation to date. But as the oldest members of this cohort turn 10 in 2020, and continue to influence their parent's voting and purchasing decisions, it does pose a few questions. How does diversity impact their views? How do they differ from their millennial parents and generation Z siblings? And how can brands- and America- prepare themselves for this next booming generation?
Generation Alpha Wants Diversity Of Product
The variety and diversity of the world around them is having a significant impact on how they view the world. In their new report global communications agency Hotwire talked directly to generation Alpha to see if their increased diversity impacted their views. The simplest illustration of their preference for diversity is in their choice of favorite ice-cream. While their millennial parents selected 56 options as favorite flavors, generation Alpha chose 75, including unicorn, green tea and peppermint bon bon.
Generation Alpha Wants To Be Their Working Mom... And Dad
60% of millennial moms today employed full-time had mothers who worked outside the home while they were growing up. Yet when surveyed, Hotwire didn't find any millennial women who recalled wanting to be a mom when they were under 10 years old.

Generation Alpha however, feels differently. Perhaps this generation understands how much being a mother is important to their parent's identity. Or perhaps watching how their mothers are able to drive influence inside and outside the home has inspired America's youngest generation to be moms- and dads. Both are now seen as "proper" jobs, and could have major consequences in reducing the inequalities currently seen in how women take on the major burden of childcare.
Generation Alpha Likes, But Doesn't Need, Tech
Last June global content business Beano Studios completed a study on UK generation Alpha kids and their millennial parents. The study found 86% of generation Alpha kids enjoy designing, making and building things and their specific interests are encouraging reading for creative and tech industries. Rather than being hooked to a screen in their bedrooms, generation Alpha has a new tech-enabled freedom which empowers them to get out and about, channeling their natural curiosity and using screens to learn about good old-fashioned playing out. They spend more time away from devices and tech, unlike their older generation Z siblings and 1/5 of them are already making money from their hobbies.
Generation Alpha Has Opinions Which Could Influence The 2020 Election
Already outpacing their parents in tech, this digital generation is also turning into social activists. They have been considered the first generation to judge people by who they are, not what they are. When asked what world issues they attribute most importance to, Hotwire found generation Alpha places an extremely high importance on topics such as "keeping children safe at school" (97%), "making sure everyone has enough food to eat", that "all people are treated fairly no matter what they look like" (96%) and "taking care of the environment" (95%). In fact, 38% of generation Alpha kids know that it is important to recycle, compared to just 22% of their Millennial parents.

The Beano Studios study echoed these findings. They found generation Alpha to be inquisitive, not taking information at face value. In fact, despite 'fake news' only entering mass consciousness in January 2017 through President Donald Trump, 31% already feel they know how to spot it.

Beano Studios also found that generation Alpha will form, project and take pride in social identities based on their own individual feelings, thoughts and interests as opposed to those dictated to them by external forces. In fact, nearly 1 in 5 members of generation Alpha have taken part in a march or protest on an issue they care about.

Group Of Elementary School Pupils Sitting On Floor Listening To Female Teacher Read Story
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Simply put, as tech-empowered, influential generation Alpha is growing up in a diverse world, this has led them to be a much more creative group - with kids' views not fitting into simple groups based on their gender, ethnicity or religion. Companies will no longer be able to rely on broad demographics to target these consumers; instead they will need to get much more granular using data and analytics to find those who most closely align with their values. Like kids before them, they have tons of "pester power," but this time generation Alpha is using their persistence, entrepreneurship and curiosity for positive change.

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How Consumer Brands- And America- Can Prepare Themselves For Generation Alpha

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The 2020 U.S. Census is expected to show that the nation is now the most racially and ethnically diverse it has ever been, with 7.6 million people defining themselves as multicultural (a 36% increase from 2010, and the largest racial percentage change this past decade).

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Primark, one of the UK's most popular retailers, has announced it will create a fund to help pay the wages of the millions of garment workers affected by its decision to cancel tens of millions of pounds worth of clothing orders from factories in developing countries across the world.

The pledge followed sustained criticism of the fashion retailer after data from the Bangladeshi and Garment Exporters Association (BGMEA) revealed it had cancelled all orders already placed with suppliers.
Garment workers face destitution as Covid-19 closes factories
Collectively brands including Primark, Matalan and Edinburgh Woollen Company have cancelled £1.4bn and suspended an additional £1bn of orders in Bangladesh alone as they scramble to minimise losses in the face of the Covid-19 epidemic. The move has already seen more than a million Bangladeshi garment workers lose their jobs or be sent home without pay.

Primark has announced that it will create a fund to help pay the wages of workers linked to orders that were due for shipment in the month after they were cancelled in Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka and Vietnam.

However, the brand also stipulated that the wage compensation would be adjusted to take into account government support packages, a caveat that has caused confusion among suppliers and industry bodies.

"While we welcome Primark's announcement that they will compensate workers for the wages they will lose as a result of these cancelled orders, it is not clear enough what they mean," says Rubana Huq, chairperson of the BGMEA. "Wage compensation should not take government loans into consideration. These brands have existing business commitments with their suppliers that are their responsibility to honour."

Factory owners in Bangladesh also asked for further clarity about whether Primark would agree to pay invoices for any of the completed orders it has cancelled or for any of the raw materials already purchased by suppliers.

Due to the Covid-19 epidemic, all of Primark's retail outlets have closed, with monthly losses estimated at £650m. Primark chief executive Paul Marchant said that the company already has £1.6bn of paid-for stock in stores that it currently cannot sell.

"Every one of our stores around the world is closed. With a backlog of stock in stores, depots and in transit, we have had to make the very difficult decision to cancel orders for future stock," he says.

"Finding a way to ensure that workers in our supply chain in these countries are paid has been a priority over the past two weeks and we are pleased that this fund will provide relief to these workers."
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Primark announces wage fund for garment workers

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Primark, one of the UK's most popular retailers, has announced it will create a fund to help pay the wages of the millions of garment workers affected by its decision to cancel tens of millions of pounds worth of clothing orders from factories in developing countries across the world.

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Nikki Tattersall began her career in 2000 as a junior buyer at Etam and Tammy Girl, before moving to buying at TK Maxx and then Asos in 2008. In 2014 she became Asos branded buying director, heading website's edit of 500 womenswear labels. Tattersall and her team scour the globe, from New York to Sydney to Guatemala looking for unique labels, be they established names or new launches and start-ups. You are Asos's branded buying director. What does this role entail? Here she tells Drapers what makes a brand stand out and the unexpected places she finds new fashion. What's the best thing about being part of the ASOS team?
Nikki Tattersall

I oversee our womenswear offer of 500 brands, with 15 departments buying a multitude of products and end-uses. The big names we stock are an integral part of our mix but introducing new and unique brands to our customer is an increasingly important focus. Our travel now spans six continents, scouring locations including Colombia, Indonesia, South Korea, Australia and Brazil to bring a curated edit of the brands we love to our customers, often collaborating to create unique ranges the customer can only find on Asos.
How do you source new brands?
Asos's growth has been dramatic, but it's incredible we've managed to maintain a true entrepreneurial spirit and we never stand still. Our teams are encouraged to be brave and, if we identify an opportunity, we can usually make it a reality very quickly. I'm proud that we're still as fast as we've ever been.
Do you think trade shows are still relevant?
ASOS.com
What makes a brand stand out?
Over the past few seasons we've seen a real evolution in the way we're identifying new brands. Our sourcing has naturally gravitated to the places where our customer is spending most of her time: Instagram, Pinterest and blogs. So we're not simply being inspired by some of the amazing images we're seeing, but going direct to the source and speaking to the guys behind the brands.
What are your current favourite brands?
My teams and I still travel to global trade shows, but they are just one of many ways in which we source new brands. Social media now plays a huge part in brand sourcing. Obviously social media has no barriers or borders, so we are able to view product from as close by as London's Brick Lane and in the next thumb swipe see a new designer in Byron Bay, Australia. In many ways this has transformed the way we work, and increased the scope and scale of what we can offer.

It has to be unique - point of difference is what we look for. It may seem strange to claim that every one of the 500 brands we stock does something different, but we strive to ensure each brand delivers individuality.
What's your favourite part of the season?
I'm super-excited about some of the new brands we're bringing on board for spring 16. Piper we discovered on a trip to New York - it was a breath of fresh air after an epic few days of scouting. Stevie May was one of our most exciting finds at Sydney Fashion Week last year - its handwriting delivers a unique mix combining local influences and Parsian chic. It's [also] exciting to discover brands with a social conscience such as the Hiptipico bags and ponchos, which are handmade by artisans in Guatemala. Their profits are re-invested into women's projects in the local community.
What makes a good buyer?
Left to right: Hiptipico, Piper, Stevie May
What's the last fashion item you brought?
It mesmerises me when the teams return from market and present their strategies for the coming season. The opportunities always appear endless and it's so exciting to see the new talent they are uncovering, and make a mental note of what will be on my own shopping list when they launch onsite.
Do you prefer online or in-store shopping?
Passion. I'm constantly surprised and delighted by how passionate and committed the next generation of buyers are - they're a new breed and are approaching the industry with a fresh take. And are not afraid to do things differently.
What's the most treasured item in your wardrobe?
We've just launched a great new label called Faithfull The Brand, everything they do is handmade and hand printed in Bali, and my latest purchase is one of their shirt dresses. They're a perfect for layering for now and then with ghillie sandals in the summer.
What's the most ridiculous purchase you've ever made for yourself?
Pretty much always online. Usually I'm inspired by an article, image or post and immediately jump online to find out more. It's a journey - jumping from site to site and discovering new influencers, boutiques and concept stores can bring a real excitement and diversity that's incredibly difficult to achieve in stores.
What do you do to switch off from work?
A hand-embroidered dress I bought in a boutique on Formentera on one of my very first buying trips to Ibiza 15 years ago. It's a work of art and I've only ever worn it once just before I got married in Tuscany a couple of years ago.

I don't think I've ever admitted this before, but one of my first ever purchases was a pair of Bros jeans.

I live in a very old cottage and we've spent the past five years renovating it, so at the weekends I love trawling design blogs and reclamation yards for inspiration on what to do next.

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My Fashion Life: Asos branded buying director Nikki Tattersall

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Nikki Tattersall began her career in 2000 as a junior buyer at Etam and Tammy Girl, before moving to buying at TK Maxx and then Asos in 2008. In 2014 she became Asos branded buying director, heading website's edit of 500 womenswear labels.

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The world of retail is fast-paced and diverse. Behind the hustle and bustle of the shop floor lies a hard-working industry of professionals to ensure everything runs smoothly. One of the most important positions in the process is the retail buyer - the individual ultimately in charge of making sure products reach the shelves of stores.

The retail buyer is more than just a purchaser: before decisions can be made over which products to stock in-store, the buyer engages in research and analysis of consumer trends and behaviours. After putting together a buying strategy, decisions must be made on budgets, time-scales and where to source products intended for stores. Successful buyers must have excellent mathematical skill, a creative approach to problem solving and be able to drive a hard bargain with suppliers.

The roles and responsibilities of the retail buyer extend across a number of areas:
Planning and strategy:
The job of the retail buyer 'begins' with planning - identifying and analysing consumer trends and patterns which might work for their organisation. Buyers must be able to not only analyse the results of research, but use the data to predict future results. Current events and culture will play a big part in consumer behaviour, so the buyer needs to keep up-to-date with the latest news and research. Once data has been analysed, retail buyers are in a position to create a buying strategy - reflecting the needs, identity and budget of their organisation.
Negotiation:
After identifying which products to acquire for their organisation, retail buyers must meet with suppliers to agree on price and make purchases. Retail buyers can expect to travel extensively - attending trade shows, meeting wholesalers and visiting stores - during this time. Good negotiation skills, to ensure sufficient quantities of product are acquired within means and budget, are crucial.
Purchase and delivery:
The buyer ultimately purchases the products to be sold in their retail outlets - but the job does not end there. Once acquired, products must be delivered to shops - it is the buyer's role to oversee delivery and ensure the right stock ends up in the right place.
Management and presentation:
The role of the retail buyer extends to stock management and, in some cases, the manner in which new products are introduced. Typical challenges include monitoring stock levels across different stores, analysing purchasing trends and moving stock from one location to another to bolster sales. Once stock has been delivered to the shop floor, the buyer may engage in consumer feedback - gathering information on new trends and what customers liked or did not like about certain products.

Creativity and energy are important traits for the retail buyer. While working with budgets and product quantities are the everyday requirements of the role, a buyer must often think outside the box to get around restrictions and challenges - using his or her skill to maintain relationships across the industry, promote the identity of their brand and, most important of all, deliver sales results to their organisation.

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Retail Buyers: Roles and Responsibilities

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The world of retail is fast-paced and diverse. Behind the hustle and bustle of the shop floor lies a hard-working industry of professionals to ensure everything runs smoothly. One of the most important positions in the process is the retail buyer - the individual ultimately in charge of making sure products reach the shelves of stores.

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BLOG BY JULIA REDMAN

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So, today I took to this stage at Fashion SVP (there was an audience by the time I got up there!) to deliver a talk on the challenges facing the buying community in the current, ever changing and volatile retail market. It's always a little bit of an unknown stepping into an arena like this, you never know quite who might be in the audience, or at what level to pitch it. However, the response was overwhelmingly positive, and serves to remind me that my many years of experience could be invaluable to those starting a career in buying. I really enjoyed chatting to some of the audience afterwards, and hopefully they were able to leave better informed and full of the enthusiasm that I tried to instill into my presentation.

This edition of Fashion SVP was built around two key areas of development, one being Denim, and the other being sustainable fashion. There were a number of other great speakers and panel sessions discussing/debating these topics, and the challenges facing us as an industry. I met several truly innovative garment and fabric suppliers, as well as labelling and packaging sources, all of whom are challenging the norms in development and production of clothing. I have learnt an enormous amount in a single day, and attending the show has reinforced the message that we are at a real turning point for the fashion industry and it is critical that we all play our part, however small, to bring about change in reducing waste, generating and using renewable energy, and creating a more sustainable and cyclical fashion supply chain. There was also a huge amount of discussion about how we become truly ethical, and this extends worldwide to include the workforce involved at every stage of the production process. As an industry we have a mountain to climb, but as with every challenge or difficult situation, we can turn this into an opportunity to really make a difference through innovation, creative product development and understanding the new ways in which our customers are interacting with the shopping experience.

#sustainablefashion #fashionsvp #buyerslife #fashionbuyer

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So, today I took to this stage at Fashion SVP (there was an audience by the time I got up there!) to deliver a talk on the challenges facing the buying community in the current, ever changing and volatile retail market.

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Innovation

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Everyone who strays into Sally Ambrose's sightline is potential research for her job. She'll clock the colour of their handbag, the cut of a collar, the height of a heel and the length of any earrings. And when she lurks among the rails of Marks & Spencer she scrutinises which tops in which colour are vanishing most swiftly and which necklaces most readily bring browsers to a halt. As head of buying for footwear and accessories at M&S it's Ambrose's job to anticipate what customers want even before they know they want it. "It's a question of marrying buying history - what's always sold well - with new trends," she says. "You have to steer the design so that you're taking risks with a new look while keeping a bankable style."

The power to impose a personal vision on the rails of one of Britain's most familiar fashion chains is something that many high street shoppers would covet since almost everyone has opinions on what the stores should and shouldn't be selling. Usually these opinions are based on personal preferences - which have to be instantly jettisoned for a career in fashion buying. "I've bought in lots of things across the years that wouldn't suit my taste," says Ambrose. "You have got to understand the customer you are selling to and be objective."

Ambrose, 44, veered into a fashion career more by accident than design. At school, sport was her passion and she chose a sociology degree at Exeter University. "I did my dissertation on advertising, so was steering my course in a business direction," she says. "But I was flirting with marketing and sales jobs when I graduated." It was a series of holiday jobs at her local Jaeger store that fuelled her interest in fashion - "I never wanted to be a designer but I'd always loved watching trends and influences" - and, on a chance visit to the Jaeger branch where she had temped, she decided to heed the manager's suggestion to apply for the company's graduate training scheme in retail management. "During my holiday jobs as a sales assistant I'd be sent to lots of different retail environments so I learned all the different store profiles and customer types, which helped me through the rigorous selection process," she says.

She became assistant manager of Jaeger's Harrods concession and discovered that her sports passion served her unexpectedly well on the shop floor. "Competitive games give you the ability to pursue a goal, to drive a team and to believe in yourself, which is handy when you're having to persuade a feisty sales assistant who works on commission to empty a box of hangers instead of chasing the next customer."

Ambrose moved into the buying office after a chance meeting with Jaeger's head of design. "As part of my management training scheme I'd had to develop and sell a scent," says Ambrose. "I won the exercise and reformed my ambition to get into buying." As assistant buyer she learned how to put a collection together - bridging the departments of buying and design to ensure that new launches were commercially viable. "Design would present their ideas and we might tell them they were missing a key v-neck or a blazer that's always sold well, or we might identify a need to put coats together earlier than usual because so many had sold to tourists," she says.

After two years in the buying office, she moved to M&S as a trainee buyer because of lack of promotional opportunities at Jaeger. Predictably she began in knicker packs - helping steer the choice of trims, cuts, patterns and fabric bases - and briefly panicked at the shift from high-end fashion to co-ordinating the nation's smalls. She remained in lingerie for five years. "When you are a buyer in charge of a range it's huge," she says. "My first responsibility was buying boxed bras with a £22m budget and suddenly every male friend I had was interested in what I did and the difference between plunge and balcony bras." She then moved via formal trousers to casual tops: "I used to get on a plane to Turkey where our manufacturers were then based, trial key shapes, put them in the stores in January, look at what had sold best in February then get back on a plane to Turkey to plan the rest of the season which would hit the shelves by April."

Manufacturing has now moved to China and India, which Ambrose, who manages six assistant buyers, visits a couple of times a year in between visiting M&S's across the country and lurking in rival stores to assess what customers are buying.

Since her graduation in sociology, numerous retail-oriented degrees have been introduced, but, although a useful leg-up into a buying career, formal fashion and retail qualifications are not a prerequisite. "Our graduate scheme looks for relevant experience, which could be stints working as a sales assistant, as I did, provided you can demonstrate how you can sell well to customers and understand trend forecasting.'

Her A-levels in art proved useful - "I can sketch out how I want a lapel or a heel to look,' and she credits an economics A-level with instilling in her crucial business sense. But the core skill, which can be gained by attentive long-term loitering in any high street, is to know the customer. "It can be a very pressurised environment because you can have buyers and designers not seeing eye to eye and you have to call the shots," she says. 'You have to have the confidence to fight for what you believe in and go with your gut instinct whether it's a belt or a bra strap.'
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Everyone who strays into Sally Ambrose's sightline is potential research for her job. She'll clock the colour of their handbag, the cut of a collar, the height of a heel and the length of any earrings.

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A good retail leader must be able to develop a strong, effective strategy to steer through the potentially murky waters ahead, keep shareholders happy and inspire their teams, even amid an atmosphere of doom and gloom. Today's retail chief executives are having to make tough decisions and do more with considerably less, as budgets shrink and costs are cut.

Paul Martin, UK head of retail at professional services firm KPMG, warns that the retail sector is facing a lack of good leadership: "Many leaders are struggling to adapt to new business models and don't know how to navigate the retail industry of the future.

"Of course, there are those out there doing a great job, but there is also a proportion now trying to fix problems that they helped to create."

As the retail industry changes, so too does the make-up of retail bosses. Fashion has already flirted with making senior hires from outside the industry: Marks & Spencer recruited former Halfords CEO J ill McDonald as managing director for clothing, home and beauty, and House of Fraser chief executive Alex Williamson came from the Goodwood leisure attraction. The skills and leadership qualities once associated with the technology industry are also becoming increasingly relevant to retail.

"My background in tech has been very useful, both in terms of how we use data, but also the way we build teams," explains Nicolaj Reffstrup, a former technology entrepreneur and current CEO of Danish fashion brand Ganni. "We apply principles that started in tech, such as hiring talent before job transcription and having a very flat hierarchy, which forces you to become a dynamic, independent organisation."

In an industry that never stands still, the qualities that make a successful leader are always changing. The next generation of retail bosses will need a host of new skills to stay ahead, and will have to find new ways to inspire their workforces. Drapers asks industry experts what the retail chief executives, managing directors and leaders of the future will look like.
Darren Topp, former LK Bennett and BHS chief executive, current chairman of Retail Executives
The first thing to say is that what we've needed in the past 30 years of retail is not what we will need in the future. Retail leaders of the future will need to be a champion of the customer - that's always been the case to some extent, but it will become even more important. It needs to be someone hard-wired to understand customers' behaviour and mindset.

Increasingly, the retail CEO is going to be someone who understands data, knows how to read it, apply it and can think about it in the context of the customer. Retailers now have so much information they risk being data blind, and the real challenge is being able to make that data actionable and deliver results.

This individual is also likely to be someone who has been exposed to different parts of a business. If we look at today's retail CEOs, many have come from the operational route, from finance, or from buying and merchandising. Businesses will start to look for someone who can cut across different functions. The leadership skills piece will also start to become even more critical.

Traditionally, many chief executives will have led from the front and acted like they had all the answers. Tomorrow's leader will recognise that not only do they not know all the answers, they probably don't know all the questions. What they will have to do is be a driver of change and surround themselves with people who recognise both the questions and the answers.

We're also likely to see more CVs from candidates who have worked in different industries. Many of the skills required in senior leadership are clearly transferable - you don't have to have been a buying or merchandising director for 20 years to make it as a successful CEO.
Caroline Pill, vice-president, global executive search, Kirk Palmer Associates
The ability to adapt and not resist change will be extremely important. What a store meant 20 years ago is very different to what stores mean today. Consumers now expect more than just product and the future retail CEO will have to understand that.

The right experience and culture will be key. Leaders can be great in one context and fail miserably in another. Sometimes we see chief executives being appointed who don't have any experience in a particular industry or role and I think, generally, experience is underrated - it remains a key factor to success. Of course, out-of-the-box hires can be successful, but it requires a hunger to learn and not impose. A retail CEO needs to be able to gain credibility immediately, but that doesn't mean you shouldn't listen to your employees, who are often also your consumers.

The future retail leader will still need to be someone with gravitas, who is trusted implicitly. It needs to be someone who makes their team feel that if they have the right argument, they can push back and have a say in the business and how it is run. However, it is a balancing act, because those leaders who aren't able to present and execute a strong vision don't tend to be successful.

Regardless of their background, once someone takes a leadership role in this industry, it needs to become their whole world. It's about knowing your brand intimately and gaining a strong sense of the competition and overall landscape. Living in an ivory tower doesn't work.
Alka Gandhi, head of retail practice, Berwick Partners
The explosion of digital and the soaring expectations of consumers require a more digital and data-savvy leader at the helm. Retailers need individuals that can track and anticipate the customer - recognising how and where to satisfy their needs through data and analytics. Future leaders will need to possess a blend of functional experiences, but in particular be comfortable operating in a big data, multi-channel and international business culture.

Effective communication, both externally and internally, is also a necessity for the new generation of retail leaders. Employees must understand the company vision and, more importantly, buy into it. Tomorrow's workforce will not follow a job title.

Too often, we have seen leaders change their strategy too late in the game. The pace of change in retail will demand a more agile leader who can adapt quickly and make decisions in real time. The new leaders will be proactive not reactive, with a constant eye on the road ahead.

The new style of leadership must first and foremost be collaborative, as the command and control style and the era of the big ego is dead. Leaders can no longer rely on their job title alone to foster respect or support. It has to be earned through actions and not words. As a result, we expect an increase in inclusive decision-making, which requires a high degree of self-awareness from individuals. They will need to understand their strengths and weaknesses, as well as be willing to listen.

Leaders are also becoming much more visible and accessible to employees and consumers. The modern generation of these audiences respond to a more human approach, and technology will help leaders engage more effectively, updating them in real time.

Senior leaders are recognising that they are not only role models within their organisations, where they impact the well-being of their employees, but also in wider society. For the new breed of leaders, the key to success lies in understanding that business results and social responsibility are interwoven.
Harveen Gill, managing director, HGA Group
Retailers will need someone who can take a fresh approach to international markets. It was very interesting to hear Theresa May talk about partnering with Africa on her recent trip to South Africa, and retail leaders will need to be reactive to whatever opportunities Brexit brings.

We're still seeing that push and pull between hiring outside of the industry and those with proven experience - House of Fraser CEO Alex Williamson, for example, comes from outside fashion, but it was interesting to see Fiona Lambert, someone with a very strong track record, joining River Island [as managing director of new business development in June].

What will become more important is cross-functional leadership across different departments. There isn't a set blueprint for organisations in terms of whether they hire from within or outside the industry, but we know that the fallout from Brexit is going to be muddy. This means that the one skill set that the future retail CEO will have to have is the ability to bring silos together.

They will also have to have an inherent brightness and be well respected. The retail sector has lost a lot of talent to banking and technology, and that is a concern. We need to attract the finest brains to this industry at a time when the British Retail Consortium estimates that 900,000 UK retail jobs could be lost by 2025. Why would the brightest and the best choose to join this sector? There needs to be a joined-up approach between retailers, brands and the government.

There are also still some "grand-daddies" of the fashion retail industry. It would be great to see a younger generation with a wide skill set coming through.

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What skills do retail leaders need today?

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A good retail leader must be able to develop a strong, effective strategy to steer through the potentially murky waters ahead, keep shareholders happy and inspire their teams, even amid an atmosphere of doom and gloom. Today's retail chief executives are having to make tough decisions and do more with considerably less, as budgets shrink and costs are cut.

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Careers clinic for Interview

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SHANGHAI, China - In many ways, the rise of modern China has been an allegory of globalisation. Today, as countries turn inward to battle the coronavirus pandemic, the idea of a complex supply chain or even one that relies on a single market far from home is seen by many as an untenable risk.

The global fashion industry actually spent much of the past decade trying to break up with Chinese manufacturing in order to escape this dangerously co-dependent relationship. It has made some progress, but China remains an enticing powerhouse with manufacturing infrastructure and attractive supply chain assets that have proven difficult to divorce from.

Although garment manufacturing, especially cut and sew, has largely decamped to cheaper markets around the world, fashion hasn't been able to kick the habit of sourcing raw materials, trims, and more from China, even as labour prices in the country continue to climb and tariffs introduced as part of US President Donald Trump's trade war continue to bite.

The idea of a complex supply chain or even one that relies on a single market far from home is seen by many as an untenable risk.

According to several experts from China's fashion manufacturing, sourcing and supply chain management spheres who were interviewed by BoF, approximately 60 percent of the world's fashion is still produced in China, if you take into consideration raw materials, fibres, textiles, trims, and accessories, such as elastic, zippers and hang tags.

"Most [other] countries' garment industries aren't fully self-sufficient; they rely on getting components from China," explained Melanie DiSalvo, founder of Virtue + Vice, a consultancy set up to help boutique fashion brands clean up their supply chain.

Her work is concentrated in India and China, but she says people might be surprised to learn how much of the material being put together in Indian factories is actually sourced from China.

"There is a huge trade going on where denim is coming from China," she added. "India is getting all its silk from China, too. I think people don't realise, all the trims and elastics are impossible to find in India; it all comes from China."

This continued dependence on China came to a head in the early months of this year, when the country became the first to experience a widespread outbreak of the coronavirus, causing its factories to close and crucial cogs in the fashion supply chain to grind to a halt. Brands that had largely offshored their supply chain out of China initially felt vindicated, having saved themselves from the supply side disruption of what was then mistakenly considered to be just a local epidemic.

"I would say relative to a lot of the industry, we are hedged in China more than a lot of our peers," Levi's Chief Executive told supply chain managers at the Retail Industry Leaders Association conference at the end of February. The company reduced its manufacturing in China from 16 percent in 2017 to between 1 percent and 2 percent in 2019, largely to escape trade war-induced tariffs. Bergh added that the move had shielded the company from that initial coronavirus hit, even as stores in China remained shut.

Today, we know that no-one and nowhere is shielded from the coronavirus pandemic. Fashion brands that had moved more of their supply chain out of China, to markets such as Bangladesh and Vietnam, found supply was disrupted there in turn.

Fashion brands need to start planning for the post-pandemic phase of business now.

Though in many cases, that supply-side disruption mattered less than the demand disruption caused by retail closures around the globe, leading many major fashion brands to cancel orders amounting to around $6 billion in Bangladesh alone, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and its knitwear counterpart association the BKMEA. Meanwhile, current season inventory sits idle in stores, warehouses and distribution centres.

But now, even as production is halted in most places around the world, China is open for business and producing the orders that have not been cancelled. Manufacturers here face an uncertain future as business from overseas becomes scarcer, mitigated only somewhat by demand from growing domestic fashion brands looking to move their way up the value chain.

While the move of production out of China has largely been about rising costs and the razor thin margins of mass garment production making it an unsustainable choice, the trend has also been an exercise in diversification to mitigate future risks.

The coronavirus pandemic has highlighted how reliant the world is on China for vital supply chain links, especially for medicines and personal protective equipment, as dozens of countries concurrently grapple for both. As a result, there is growing pressure for the pharmaceutical industry in Europe and North America to be repatriated.

Similarly, fashion companies, especially American ones, are likely to feel the pressure to "decouple" from China in an election year which promises to be heavy on anti-China rhetoric.

With so much in flux in the midst of the ongoing pandemic, it is too early to know exactly how fashion's post-coronavirus supply chain will change, in terms of its reliance on China or many other factors currently collectively weighing on the industry. Nevertheless, fashion brands need to start planning for the post-pandemic phase of business now.

In this uncertain time, BoF turned to experts in Chinese manufacturing, sourcing and supply chain management for advice about what brands should consider before making any big decisions.
Gerhard Flatz, managing director of KTC Limited, a high-end performance wear specialist based in Guangdong Province, manufacturing for niche European brands and Chinese designer Yang Li.
"It doesn't matter if its in China, Cambodia, Bangladesh, Myanmar, America, or God knows where; we have to leave this macro environment and create a micro environment. I envisioned this is 2008 when I took over the company. We increased our cash reserves and upgraded our product offering. We saw even back then that China would become too expensive, brands would shift their sourcing focus to Southeast Asia and what is left in China is the premium piece of the cake. A diversified supply chain means a lot of manpower and a lot of uncertainty, so we have to come back from this extended workbench concept."
Yossi Nasser, chief executive of leading intimates manufacturing supplier, Gelmart International
"Having the supply chain flexibility to reshore to China now, while Bangladesh and India are experiencing lockdowns is key. In the near term, there is going to be this element of reshoring [to China], but [brands] don't want to be caught out in the situation many companies have just faced [as part of the US-China trade war] where a tariff can [be] put on your product with [only] 30 days notice. If [brands] strategically put some of the supply chain back to China [now then don't] make it a ditch to ditch, aggressive move. Maybe centralise [most operations there] and then use diversified sources [for] sewing and cutting, so if there is a supply chain disruption, you are able to flexibly and quickly scale up one production source and de-emphasise another."
Melanie DiSalvo, founder of Virtue + Vice, sustainable supply chain consultancy, previously product developer for companies including Walmart, Target, Ralph Lauren, and Levi's.
"China was set up to make things. The infrastructure is there and everything just works. If I was a struggling brand, I would want to be in a country like that, where things are set up to move and you are going to have the least amount of issues along the way. You need to be focusing your money and staff and attention on rebuilding your business. Supply chain diversification is a long-term goal but I don't recommend the brands I work with jump right into that because everyone else is closed and China is still going. That's the reason some of my brands are surviving right now. That's not something to walk away from."
John Evan, managing director of Tractus Asia, a strategy and operations management consulting firm.
"You are going to continue to see a decoupling, politically, it's clear that [the US and China] would each like to have less reliance on the other. I think you will continue to see companies looking at [manufacturing in] China for China, then nearshoring or reshoring back to their own countries, especially for fashion and apparel. The other thing that has been highlighted by Covid-19 is [the trouble with having] too many eggs in one basket. All of a sudden, risk mitigation has gone from people thinking it's kind of important, to the US-China trade war when people realised it was really important, to now when it has become the number one concern."
Hilmond Hui, vice president of Bombyx, a specialist sustainable manufacturer that provides silk fabrics to big name eco-brands including Everlane, J Crew and Madewell.
"On-shoring for the US and European brands will likely take a back seat, especially in our industry, due to priorities lying in restarting retail and the economy. In my own opinion, off-shoring from China fractures the supply chain to a point where it can create a lot of logistic and information stress and inefficiency. Consolidating supply chains can be done by partnering with vertical operations across different materials or product categories. By doing this, the suppliers have the opportunity to be more flexible in their own set up because they control more of their supply chain, and have more room to spread out their production and finances."
Anson Zhou, spent more than a decade as a senior merchandising manager at industry giant Li & Fung before becoming a freelance consultant in sourcing and supply chain management for clients including Macy's, JC Penney and Tommy Hilfiger.
"Most retailers and brands are unsure about the market situation [but] obviously, the order size is going to be much lower compared to last year. [The best strategy is] to try some small orders and put the products on the market and see the reaction and make a quick decision on a re-order. That means they need quicker speed in their supply chain management. Southeast Asia, Bangladesh or Myanmar are focused on huge quantities and long delivery times. If we focus on quick delivery in 45 days, even 25 days, that makes China the big player, [so] international brands will have to look to China because they lead the way in that."
These interviews have been condensed and edited. Prada Kickstarts Luxury 520 Campaigns
Superstar Cai Xukun stars in Prada's latest campaign for China's May 20 Valentine's Day equivalent (known as 520, the numbers in Mandarin sound similar to the phrase, "I love you"). There are several Chinese Valentine's Days scattered throughout the calendar but 520 has quickly risen to become perhaps the most important for driving gifting, especially this year as sales remain weak in the wake of China's coronavirus outbreak. Prada was the first luxury brand out of the box this year with a digital campaign that sees Cai adding up his actions: "100 hours thinking of you," "12 new songs written," "85 attempts to pick the perfect gift," and so on, until he gets to the magic number of 520. (Prada Press Release)
Chinese Beauty Businesses Pivot Online During Pandemic
For Maggie Fu, a Shanghai-based make-up artist and beauty influencer, the widespread stay-at-home orders in China at the start of the outbreak created an opportunity. With tens of millions of manicure enthusiasts unable to visit nail salons, Fu decided to create a stick-on, DIY manicure kit that delivers salon-quality nails, with no skill required by customers to apply them. Yue Xiaolin, a fellow make-up artist, professional stylist and the founder of Lin Makeup, pivoted to conducting online classes, designing professional courses for make-up stylists and an everyday beauty tutorial option for cosmetics enthusiasts. (South China Morning Post)
Tmall to Launch Luxury Outlet
Tmall has launched its "Luxury Soho" channel, marking the Chinese e-commerce giant's entrance into the luxury outlet business. The new initiative, in parallel with Alibaba's Luxury Pavilion, is expected to increase the digital footprint of high-end brands in post-coronavirus China. Currently, brands such as , Giuseppe Zanotti, and Versace are available on the outlet channel.
JD.com to File for $2 Billion Second Listing
Chinese e-commerce giant JD.com has filed confidentially for a second listing in Hong Kong, according to people with knowledge of the matter, joining rival Alibaba in tapping the city's stock market for funds.The offering could raise at least $2 billion, the people said, asking not to be identified because the information is private. The Beijing-based company, which currently trades on Nasdaq, has a market value of $64 billion.
China's Online Population Reaches 900 Million
The number of people using the internet in China reached 900 million in March, an increase of 75 million from the end of 2018, according to a report from the China Internet Network Information Centre (CNNIC) released this week. Today, 710 million people shop online, an increase of 100 million compared to 2018. Online payment users total 768 million, up from 600 million, with 765 million making payments via mobile phone. (China News Service)
Dolce & Gabbana Swim Against Tide in Hong Kong
Recent months have brought news of one luxury brand after another shuttering sizable retail locations in Hong Kong, with steep rents more and more difficult to justify in the wake of ongoing political unrest hampering tourism from China, followed by the worldwide coronavirus pandemic, hampering tourism from everywhere else. Dolce & Gabbana have bucked that trend by revamping and reopening its flagship store on Hong Kong's Canton Road - a show of confidence in Hong Kong's local luxury consumers. (Fashion Network)
China's Pinduoduo Invests $200 Million in Appliance Retailer
The move marks Pinduoduo's first strategic investment after it raised $1.1 billion in a private share placement in March. According to a statement, the strategic partnership will strengthen Pinduoduo's position in the household appliances and electronics sector, as well as strengthening its omnichannel proposition through Gome's 2,600 offline retail stores across 776 cities across China. (Tech in Asia)
May Holiday to Test Chinese Appetite for (Domestic) Travel
China's upcoming Labour Day public holiday will run from May 1 to 5, and average airfares for Chinese travellers are about 30 percent lower than they were last year, according to a report from Alibaba Group's travel agency Fliggy. Around 90 million people will embark on trips during the extended holiday, about double the number who travelled during the Tomb Sweeping holiday earlier this month, according to a separate report published yesterday by China's largest online travel agency Trip.com. (Yicai Global)
Date Set for China's Most Important Political Gathering
After its original March date was pushed back due to China's coronavirus outbreak, China's joint sessions of the country's National People's Congress and Chinese People's Political Consultative Conference, colloquially known as the Da Liang Hui (or two big meetings) are now set to start on May 21 and 22. China ratifies major legislation and unveils economic targets at these meetings, which see 5,000 delegates descend on Beijing for at least 10 days.
China Decoded wants to hear from you. Send tips, suggestions, complaints and compliments to our Shanghai-based Asia Correspondent casey.hall@businessoffashion.com.

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Where Should Fashion Brands Manufacture Now?

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SHANGHAI, China - In many ways, the rise of modern China has been an allegory of globalisation. Today, as countries turn inward to battle the coronavirus pandemic, the idea of a complex supply chain or even one that relies on a single market far from home is seen by many as an untenable risk.

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Cellulose Carbamate process, from waste fibers to recycled fibres, by Infinited Fiber
Infinited Fiber Company

Transforming the fashion industry from its linear 'take, make, waste' model to a circular one, where materials are perpetually recycled, is considered the 'holy grail' of sustainability. With global apparel consumption projected to rise by 63% to 102 million tons in 2030, and an increase in clothing being sent to landfill accordingly (the Ellen MacArthur Foundation reports that $500 billion of value is lost every year due to clothing underutilisation and a lack of recycling), achieving circularity is becoming even more critical. It has remained elusive, however, with collaborative system-wide changes across the fashion supply chain required in order to 'close the loop.' The focus of fashion brands to date has been on somewhat isolated initiatives, including encouraging consumers to mend and wear their clothes for longer, clothing resale, rental and recycling. Whilst consumer efforts are a positive step, the Paris Agreement on Climate Change and Sustainable Development Goals (SDGs) demand solutions on a global scale to halt climate change and restore biodiversity within specified timeframes, to meet agreed targets. The projected growth of the fashion industry and the resulting emissions and waste generation make a scaled circular fashion industry solution an urgent environmental imperative. But what level of stakeholder cooperation across the industry is needed to achieve circularity, and how would this be coordinated in a fiercely competitive market?
Creating A Circular Blueprint
Driven by the data cited above and the potential to deliver textile recycling at scale, Finnish biotechnology group Infinited Fiber Company have led a successful bid for over €6M of European Union research and innovation funding, to form a consortium to create a circular fashion industry blueprint. The funding supports the New Cotton Project's 12 consortium members, spanning Finland, Sweden, Germany, The Netherlands, Portugal, Slovenia and Turkey, to work together across waste management, recycling, retail, manufacturing and academia to define a new circular fashion system and business model that they hope will lead to industry-wide adoption-and a significant reduction in fashion's waste and environmental impact. What's highly novel about this project is that it unites companies who compete in the market, but also recognise that collaboration is needed to achieve circularity at the industry level. Industry giants Adidas and H&M are partners on this project and will work together to facilitate "the scale and volume needed to properly test this (technology)," said Infinited Fiber's CEO Petri Alava during a recent video call. Representing Fashion for Good, who are facilitating stakeholder collaboration during the project, was Kathleen Rademan: "What we have noticed is, in order to get something like chemical recycling off the ground, more than one brand is needed."

Consortium Partners

During the 3 year project, Infinited Fiber will provide 3 tons of their cellulose carbamate fibres (recycled from textile, cardboard and other high cellulose content waste) to H&M and Adidas, for use at their partner mills and manufacturers, Inovafil, Tekstina and Kipas, who already operate within the brands' supply chains. The mills will spin, dye, knit and weave the fibres into yarns and fabrics (single jersey and denim) for use in the brands' commercial fashion products. H&M and Adidas will obtain consumer feedback on the products throughout their life cycle, and at the end of life, take-back schemes (which H&M explained to me over email are still in the initial planning stages) will feed the products into sorting facilities, and from there, into either chemical recycling feedstock or resale channels, depending on the garment quality.

On the waste handling and processing side a number of consortium collaborators will conduct ongoing data collection and analysis to define new workflows and processes needed to deliver circularity at scale. Holland-based Frankenhuis, will sort and pre-process the textile waste, while the South-Eastern Finland University of Applied Sciences (XAMK) will develop a technical solution for the continuous processing of textile waste fibres for pre-treatment. REvolve Waste's role is collecting and managing textile waste data to estimate feedstock availability in Europe and define the grade of the used textile waste. On the consumer and business retail side, RISE (the research institute of Sweden) will conduct the sustainability and techno-economic analyses alongside Infinited Fiber Company, in addition to managing the eco-labelling for the project and subsequent fabrics and garments. Finland's Aalto University will analyse the project's resulting ecosystem and circular business models on a more macro level, aiming to define the most feasible business model.

Kipas Textiles Factory
Kipas Textiles

Legislation on recycled textiles
The magnitude and complexity of this project is clear, and EU funding to drive the initiative is clearly pivotal. Commercial businesses face such unique challenges during the global pandemic, that such an ambitious project surely requires grant funding with the sector-wide environmental targets in mind. In fact, during our discussion, Kathleen Rademan and Petri Alava both mentioned potential EU regulations for mandatory recycled content in textiles, however Rademan declared: "We don't bet on legislation, we back innovation," indicating their commitment to ensuring that Infinited Fiber technology achieves global commercial viability. In terms of the motivator for fashion companies, Rademan says "brands are becoming more aware of (impact) reporting. This is top down (SDGs, carbon targets, recycled content targets) and bottom up (listening to consumer sentiment and demonstrating that through product)." Add to this the newly established Fashion Pact (H&M and Adidas are both signatories) which requires validated company-specific Science Based Targets on emission reductions, and involvement in achieving circularity at scale makes complete sense.
Circularity Enabling Environmental Impact Pricing
During a discussion with Aalto University Professor Kirsi Niimimaki, she elaborated on their role in leading the "ecosystem building," where they will create ways for the consortium members to share information within a co-dependent and collaborative framework that defines value creation beyond money. "We quite strongly believe that when we move to circular systems, the supply chain needs to be much more transparent - we need much more information. If it's possible to construct this transparent data system, that information could be part of the business (decision making) and part of the pricing system." Niimimaki suggested that such data collection would facilitate shared Life Cycle Analysis (LCA) and carbon footprint data, meaning that environmental impact "could then be included in the pricing system." This would be revolutionary in an industry where opacity maintains a product pricing system that is completely divorced from data on resource use, waste and emissions. It could also be pivotal in shining a light on the environmental impact fashion is having on developing countries, where much of its manufacturing is done. This project scope sits wholly within Europe, however it should be noted that the vast majority of global apparel production is in China and Bangladesh. I state this not to diminish the critical importance of this project, but to say that it will not produce an immediately implementable global blueprint solution, but it will pave the way for it.

Infinited Fiber Company wet spinning process
Infinited Fiber Company

Environmental Impact Reduction of Circularity
Before a new circular fashion system is implemented as a result of this project, quantification of the expected environmental benefits of Infinited Fiber's fibres and perpetual recycling method is crucial. What does the life cycle of an Infinited Fiber fibre-based product look like compared to a virgin fibre one, and is Infinited Fiber fibre more 'sustainable' that other plant based chemically synthesised fibres, like viscose? Infinited Fiber have just completed an LCA based on their current pilot operations. In an optimal scenario where production happens in a modern factory powered by renewable energy sources, carbon dioxide equivalent emissions (CO2e) from their cellulose carbamate fiber production are calculated to be below 800 kg/tonne of fiber produced from textile waste. For comparison, research indicates that the viscose fiber carbon emission equivalent in a modern European facility is around 1,200 kg/tonne and as high as 5,300 kg/tonne if produced in China, powered by coal. Fundamental to the success of this circular system, then, is the parallel development of global green energy infrastructure. In a timely announcement this week, UK Prime Minister Boris Johnson committed to a radical green energy innovation plan and banning the sale of fossil fuel powered vehicles from 2030. The next President of the United States, Joe Biden, has committed to reentry into the Paris Agreement when he takes office, reconfirming the US commitment to environmental policy.

The New Cotton project itself will also include an LCA analysis that takes into account the whole value chain, from raw materials through to fiber, yarn and garment production, as well as end-of-life. To be viable, Alava explained to me that Infinited Fiber's share of the market would need to rival that of viscose, which currently stands at around 7% of global fibre production. Infinited Fiber are in discussion with two Chinese companies interested in licensing their recycling technology, offering promise to their aim of global expansion. However Alava concedes that the fashion industry is "relatively conservative...so we are not sure the industry is ready to invest in this." Undaunted, Alava said they are exploring other business models that could see them become a large-scale supplier themselves.

Since conducting the interviews for this article, H&M and cellulose chemical recycler Renewcell have announced a multi-year partnership where circulose pulp will be provided to the brand to replace a portion of its virgin fibre usage. But to transform to circular materials across the brand's vast product lines, more than one recycled cellulose supplier will be needed, they say. Nellie Lindeborg, who manages Assortment Sustainability for the group said: "We are always looking to widen and diversify our material portfolio for use across the group." She highlighted that cellulose carbamate is unique to Infinited Fiber Company, given that it provides fibres ready for spinning, rather than a pulp still requiring processing into fibres. H&M invested in the company in 2019 via their CO:LAB, and Lindeborg added that their overall "aim is that the entire industry should benefit from wider availability of these materials."

With Infinited Fiber Company's sights on global scaling of their technology, the outcomes of this three year New Cotton Project, which ends in September 2023, will (at least partly) determine their business model. As engineers and instigators of the first end-to-end multi-stakeholder circular fashion blueprint, our planet's health depends on their success.

... Read More

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H&M And Adidas Join Industry Consortium Partners Delivering A Blueprint For Circular Fashion

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With global apparel consumption projected to rise by 63% to 102 million tons in 2030, and an increase in clothing being sent to landfill accordingly (the Ellen MacArthur Foundation reports that $500 billion of value is lost every year due to clothing underutilisation and a lack of recycling), ach...

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Covid and Brexit could see UK manufacturers bringing it all back home | Manufacturing sector | The G

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Bonnie Clyde had just sent free pairs of beach-ready sunglasses to a who's who of celebrities and influencers when the pandemic cancelled everyone's vacation plans.

Suddenly, a campaign meant to cement Bonnie Clyde as the nexus between internet culture and LA cool in the minds of consumers didn't seem like such a good idea. The brand cut its social media ad spending to close to zero in March, joining countless other fashion companies that saw the marketing budget as an easy way to cut costs.

That turned out to be a mistake, said Jon Yuan, Bonnie Clyde's founder. Halting Instagram ads was like cutting off the brand's oxygen supply. Sales dropped to next to nothing.

By late April, Bonnie Clyde had ramped up its marketing again, now with paid social ads rather than a gifting campaign. It focused on its bestselling models, including rectangular "show and tell" acetate frames, inscribed with phrases like "Don't look at me" and "I'm dancing" on the temples. Sales are on track to double this year, Yuan said, but he regrets missing out on an opportunity to speak to consumers stuck at home in the early days of the pandemic.

Plenty of companies learned the same hard lesson as Bonnie Clyde this year. A slump in social media advertising this spring, seen by some as the start of a long-term shift away from Instagram ads and influencer campaigns, was over by mid-summer. Facebook reported a 22 percent increase in advertising across its platforms in the third quarter, to $21 billion. Snapchat's overall revenue rose by more than half.

Ad rates have also come roaring back. In early November, cost per one thousand clicks across social media fluctuated between 20 percent and 60 percent higher year-over-year, according to Within, a marketing company.

That's created a quandary for brands, many of which were already struggling to pay for rising online advertising costs even before the pandemic: with sales down and the economic outlook bleak, they can't afford to spend big on social marketing like they used to. But they now know they can't afford to stay off social media, either.

Brands stuck on the customer acquisition hamster wheel have to get creative about cutting expenses. The trick is to keep spending on the ad buys while reducing the cost of producing those ads. Once a brand reaches critical mass, or its customers are loyal enough that reaching new ones is less urgent, it may not need to spend so much, proportionately, on social media ads. But for most brands, that day is still far off.

"When it comes to investing in paid campaigns, it's not whether people should do it or not, there's no option, you have to," said Revecka Jallad, president and co-founder of the digital marketing agency Divisa. "What I like to compare it to is like an aeroplane trying to take off: If you don't get to a minimum [speed], you can't cruise and you just crash."
Spending Money to Make Money
Paid social media ads - those promoted posts that appear in a user's feed, in Stories or on an explore page - help drive customers to a brand's website, and hopefully, to make a purchase. But the cost to get from point A (the social media platform) to point B (the brand's checkout page) is a pain point for small brands, which may find themselves spending more to attract customers than they make off the eventual sale.

For brands without a long-term strategy to break out of that cycle, the problem often snowballs: They pour every dollar they make back into ads to "buy" more customers. Meanwhile, the cost of the ads on social media platforms, set via auction-based pricing, gets higher and higher.

[Brands] think they're spending a lot but actually, they're not even spending enough to move the needle.

The auction system favours large orders, meaning brands have to spend big for their marketing to gain traction.

"[Brands] think they're spending a lot but actually, they're not even spending enough to move the needle," Jallad said. "It's so much easier to spend $10,000 [on paid ads] and make $20,000 than it is to spend $5,000 and make $10,000."

It's what companies do next that determines whether brands break free of the cycle. Some see one-to-one returns on their marketing, meaning money spent on ads leads directly to roughly the same amount of sales. But if those new customers fall in love with a product and become repeat purchasers, those ads will have more than paid for themselves in the long run.

Fair Harbor, a men's swim trunks line, had its first million-dollar sales month in February. But when Covid-19 hit, swimwear became one of the fastest declining retail categories, reducing the brand's expected Spring busy season to dust.

The brand stuck with its marketing plan, including plenty of Instagram ads, plus spending on Snapchat, Google Search and Sirius XM radio. Fair Harbor handles social ads in-house to keep costs down while using its digital marketing agency only for targeted buys, said Caroline Danehy, co-founder and chief creative officer.

The brand found that its best-performing paid social ads highlight the benefits of the product itself: mesh lining beneath the brand's signature swim trunks that help wearers avoid chafing. The "thumb-stopping" ads, as Danehy calls them, came about after she tested different formats, all against what drove the highest click-through rates.

"We saw ... what was working and then just put the pedal down on the gas and started just really investing deep in those online channels," said her brother Jake Danehy, the company's chief executive.
Related Articles: What Does a Winning Post-Covid Marketing Plan Look Like? How to Work With TikTok Talent Selling Fashion on Instagram: Expectation vs. Reality

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Why Social Media Advertising Is Still Necessary

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Bonnie Clyde had just sent free pairs of beach-ready sunglasses to a who's who of celebrities and influencers when the pandemic cancelled everyone's vacation plans. Suddenly, a campaign meant to cement Bonnie Clyde as the nexus between internet culture and LA cool in the minds of consumers didn't seem like such a good idea.

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LONDON, United Kingdom - Monki's newest drop is made from old clothes.

The H&M-owned brand's capsule collection of grey sweatsuits is the latest recycling experiment by a global fashion brand. So far, so 2020. But the Swedish fast-fashion giant has bigger ambitions for this particular project.

For the last four years, the H&M foundation has been working with the Hong Kong Research Institute of Textiles and Apparel (HKRITA) to develop a machine that can take old stretch jeans, jumpers and sweatpants and, using heat, water and biodegradable "green" chemicals, turn them back into materials that can be processed and re-spun into new clothes. Monki, a youth-focused brand that sits alongside labels like COS and Arket in H&M group's portfolio, will be the first H&M brand to test-drive the new technology.

The ability to recycle old clothes back into new, high quality materials on an industrial scale is a top priority for the circular fashion movement, whose proponents envision an apparel industry designed to minimise waste and pollution. They have a long way to go: the Ellen MacArthur Foundation estimates nearly 40 million tons of textile waste is sent to landfills or incinerated each year.

Much of that material would be impossible to upcycle into new clothes today. Long-standing mechanical recycling techniques - which shred materials like wool, cotton or cashmere to recapture original fibres - often do so at the expense of quality. Blended fabrics, which combine natural fibres like cotton or wool with synthetics like polyester, are particularly tricky to repurpose. And where the knowhow to turn old clothes into new material does exist, it has so far largely been confined to the lab or the odd pilot project.

But a flurry of high-profile new projects could move the needle in a material way.
Toward a Tipping Point
Over the coming months, one of Monki's biggest suppliers is installing HKRITA's machine. By early next year, it will have the capacity to transform around 1.5 tons of old textile waste daily into raw materials, replicating the technology at industrial scale for the first time.

The goal is to prove by the end of 2021 that the machine is commercially viable, paving the way to increase capacity.

"We have built a system ... that gets us into the large scale now we can make a difference category," said Edwin Keh, chief executive of the Institute.

To be sure, at current volumes, the machine will barely register in Monki's overall product selection. Its first drop will be just a few hundred items sold online. But the 14-year-old brand, which markets primarily to young women, sees supporting initiatives like this as an important part of maintaining its relevance.

"The whole 'Greta wave' is our girl," said sustainability director Jenny Fagerlin, referring to Swedish climate activist Greta Thunberg. "We want to be a frontrunner."

Elsewhere, Kering, PVH and Target have formed a consortium with innovation hub Fashion for Good, Laudes Foundation and manufacturer Birla Cellulose to road test five chemical recycling technologies. And earlier this year, Ralph Lauren took a minority stake in material science startup Natural Fiber Welding, which is working to improve the quality of recycled cotton. The US luxury fashion brand said the investment is intended to "help create and scale a new industry standard for natural fibre recycling."

We want to be a frontrunner.

Sweden-based Renewcell is already producing 4,500 tons a year of trademarked Circulose pulp, which is recycled from discarded textiles made from cotton and other natural fibres. It's a raw material that can be re-spun into virgin-quality viscose or lyocell. So far, Renewcell has partnered with brands including Levi's, H&M and Bestseller and it's part of Fashion for Good's new project.

It's building a second 60,000 ton plant in Sweden scheduled to start production in 2022 and is expecting to expand its overall capacity to 360,000 tons by the end of the decade. Earlier this month, the company announced plans to list on the public market in Sweden.

The real transition from lab experiment to industrial scale is only just beginning. Renewcell's volume represents an infinitesimal fraction of global textile production and it's currently among the most mature products on the market.

The swift acceleration in efforts to bring textile-to-textile recycling technologies to market reflects evolving cultural and consumer trends, as well as the growing maturity of the innovations. Where historically brands have had to pay a premium for materials that didn't perform as well or feel as good as virgin fibres, there's growing confidence in the potential of the current crop of innovations.

HKRITA maintains the technology Monki is experimenting with can produce material that consumers would never know was recycled, at the same cost as mainstream fibres.

"Next year, we want to refine it; if we can get this to be cheaper than virgin, then it's a really cool, compelling case," said Keh.

The whole Covid thing has just made the circularity space hit overdrive.

The coronavirus crisis has also ratcheted up the fashion industry's already-growing interest in sustainability. Conversations around green economic recovery plans have increased scrutiny on the sector's climate impact, while efforts to improve fashion's environmental performance have been among only a handful of topics that continued to resonate with consumers through the pandemic.

"The whole Covid thing has just made the circularity space hit overdrive," said Cyndi Rhoades, founder of Worn Again, which has plans to build a demonstration plant for its blended textile recycling technology in the UK in the next few years. "It feels like we were working in a vacuum for so many years and you could only hear the sound of tumbleweed, and now it's reached fever pitch and we're working towards solutions."
A Closed Loop System
There's no guarantee any of the current crop of recycling projects will perform well enough to win further investment.

"We've been part of a couple of initiatives that have tried and died," said Fagerlin. "It's just sci-fi and it never really hits the market."

Even if the technology succeeds in producing raw materials that can produce cheap, high-quality recycled fabric, working it into a complex global supply chain is a separate challenge that some experts predict will take decades.

Assuming its current series of test projects is successful, Fashion for Good estimates it will take between five and seven years to scale to fully operating plants. For that to happen, brands need to make commitments to the new materials that would incentivise manufacturers and investors to get on board.

"The capital gap is enormous," said Kathleen Rademan, innovation platform director at Fashion for Good. A January report the organisation put together with Boston Consulting Group pointed to $20 to $30 billion in annual investment required over the next 10 years to develop and scale solutions like recycling technology that can help solve the industry's environmental challenges.

And beyond the recycling technology itself, a whole new infrastructure is required to support a system that no longer treats old clothes as waste, but as feedstock. Many of the technologies currently under development can only handle specific types of material, which means more sophisticated sorting and supply chains need to be established.

"The world is still in the [research and development] phase of circularity as a system," said Rhoades.

Nonetheless, these technologies have the potential to be game-changing. The new "green machine" Monki is using for this month's capsule collection can process blended cotton and polyester, solving for one of the major infrastructure challenges. And it's a modular system that can plug into existing manufacturing relatively swiftly. If all goes well this year, it's a technology that will have the support of the H&M group to scale further.

"This supplier is one of the biggest in the supply chain; for them, there is no business case if it couldn't be scaled up and replace all polyester in the future," said Fagerlin. "I really hope in the next year we can build a roadmap that clearly says when."
Related Articles: Can Recycling Fix Fashion's Landfill Problem? Luxury Brands Burn Unsold Goods. What Should They Do Instead? Fashion's Growth-Focused Business Model is Not Sustainable. What's the Solution?

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Chasing The Holy Grail of Circular Fashion

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LONDON, United Kingdom - Monki's newest drop is made from old clothes. The H&M-owned brand's capsule collection of grey sweatsuits is the latest recycling experiment by a global fashion brand. So far, so 2020. But the Swedish fast-fashion giant has bigger ambitions for this particular project.

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UK brands are cancelling orders, breaking long-held contracts and devastating the lives of workers in poor countries.

In these difficult times, your voice could make all the difference.

The rich are getting richer while people living in poverty - and the planet we live on - pay the price.

That's why we speak up about global issues of justice in trade. We want to live in a world where all trade is fair - can you help us get there?

Join with thousands of people who are taking action against injustice in trade and fighting for a fairer future.

It's too easy for UK companies to grab precious land, break promises, and divide communities in some of the world's poorest countries.

What could the coronavirus mean for poorer countries in the context of international trade?

When we speak up together, people start to listen. Here are some of the campaigning successes that we've created together so far.

A transparent tea sector

Before we launched the 'Who picked my tea?' campaign the women in Assam who pick the tea we drink in the UK had no idea where it ended up.

But together we persuaded all 6 of the UK's biggest tea brands to reveal their suppliers, down to the exact tea estate. Now we know where more than 70% of tea sold in the UK comes from and the UK tea sector has moved from a position of secrecy to becoming one of the most transparent around.

And the information we uncovered is powerful. Now we're helping tea workers to use it in their struggle for better pay and working conditions.

A fairer future for developing countries after Brexit

When we started to publicly campaign on Brexit trade deals in January 2017, it looked like the needs of the poorest countries could be completely overlooked.

But thanks to the actions of thousands of us, the government announced that products from the 48 least developed countries will continue to have duty-free access to the UK market after Brexit. This will safeguard the livelihoods and businesses of thousands of people in countries like Tanzania, Bangladesh and Uganda.

A breakthrough for fairer supermarkets

Unfair trading practices from supermarkets - like failing to pay their suppliers on time or changing orders at the last minute - have been all to common.

Together we've been speaking up for suppliers on this issue for many years and recently we saw a major breakthrough.

A new European directive has been issued which bans a variety of unfair business practices - which means farmers in developing countries who sell to big EU food businesses will be able to complain to a regulator if they are subjected to illegal treatment.

We're building a movement of people willing to stand against injustice in trade and work towards a fairer future. Fill in your details below to stay connected...

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Campaign with Traidcraft Exchange - Traidcraft Exchange

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Join with thousands of people who are taking action against injustice in trade and fighting for a fairer future. It's too easy for UK companies to grab precious land, break promises, and divide communities in some of the world's poorest countries. What could the coronavirus mean for poorer countries in the context of international trade?

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London Fashion Week is historically a quarterly event divided into men's and women's weeks for specific seasons.

The event has been hosted by the British Fashion Council (BFC) since 1984.

What was originally supposed to be London Fashion Week Men's in June will now be a digital and gender-neutral event.

London Fashion Week in September will also be gender-neutral, allowing menswear, womenswear, and gender-free designers to showcase their styles together, a BFC representative confirmed to Vogue.

Visit Insider's homepage for more stories.

For the first time in nearly 40 years, London Fashion Week will be digital and will include womenswear, menswear, and gender-neutral fashion labels.

Due to the coronavirus outbreak, which has caused the Olympics to be postponed and countless cultural events to be put on hold, London Fashion Week will be a virtual event held from June 12 through June 14, according to a press release obtained by Vogue.

Designers are invited to showcase fashions through lookbooks, online showrooms, videos, podcasts, and other digital exhibits, the statement said.

London Fashion Week has been held since 1984 and is historically held for menswear and womenswear designers separately

The fashion week has been hosted by the British Fashion Council (BFC) since 1984 and is held on a quarterly basis, with events for each season and divided by menswear and womenswear.

This year, London Fashion Week will be gender-neutral. According to a statement published by ELLE, the BFC defines this as allowing womenswear, menswear, and gender-free design labels to participate in the same week of fashion events together for the first time.

London's fashion week in June, as well as the previously scheduled September event, will include menswear, womenswear, and gender-free designs, a BFC representative confirmed to Vogue.

Traditionally, both London Fashion Week and New York Fashion Week have stuck to reserving separate events for men's and women's fashions. In 2018, the Council of Fashion Designers (CFDA) in the US added a "unsiex/nonbinary" category to New York Fashion Week to include designers who make clothes without labeling them as being for women or men.

"It is essential to look at the future and the opportunity to change, collaborate and innovate," British Fashion Council Chief Executive Caroline Rush said in a statement published by ELLE.

"Many of our businesses have always embraced London Fashion Week as a platform for not just fashion, but for its influence on society, identity, and culture," Rush continued. "The current pandemic is leading us all to reflect more poignantly on the society we live in and how we want to live our lives and build businesses when we get through this."

In her statement, Rush added that the positive side to having a digital event may make the fashion community more accessible to the masses.

"Designers will be able to share their stories, and for those that have them, their collections, with a wider global community; we hope that as well as personal perspectives on this difficult time, there will be inspiration in bucketloads. It is what British fashion is known for," Rush said.

The BFC isn't the first global fashion authority to experiment with virtual runway shows or exhibits. Shanghai Fashion Week, which was held from March 24 to March 30, was the world's first completely digital fashion week. Earlier in March, Tokyo Fashion Week was held in the form of livestreamed videos, where designers showcased their collections for Fall 2020.

Representatives of the British Fashion Council did not immediately respond to Insider's request for comment.

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London Fashion Week will be a gender-neutral event for the first time in its nearly 40-year history

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London Fashion Week is historically a quarterly event divided into men's and women's weeks for specific seasons. The event has been hosted by the British Fashion Council (BFC) since 1984. What was originally supposed to be London Fashion Week Men's in June will now be a digital and gender-neutral event.

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EXCELLENT PADELT BUT MISSING THE REFLECTIVE BLOG PLEASE ADD

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INP CONCEPT WHAT TO INCLUDE

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INP BLANK CONCEPT

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As governments around the world seek to save lives by slowing down the spread of the coronavirus, they are having to take dramatic measures, with big implications for economic activity. The United Kingdom declared a lockdown on March 23, 2020, to control the COVID-19 pandemic. This seems to have helped rein in the public-health crisis but is taking its toll on the economy.

In a typical lockdown week in May 2020, we estimate that economic activity (as measured by GDP) is down roughly 30 percent from February 2020 levels. According to the Office of National Statistics, in the weeks from April 6 to 19, 2020, 23 percent of businesses had temporarily closed or paused trading, with around 60 percent of businesses that continued to trade reporting a fall in revenues. Economic activity will recover as lockdown restrictions are lifted, but the speed and patterns are highly uncertain and will vary by sector. In McKinsey's midpoint scenario, UK GDP in 2020 is expected to shrink by 9 percent, overall.

Such a rapid fall in output has significant implications for employment. We find that during lockdown, around 7.6 million jobs are at risk-a term we use to encompass permanent layoffs, temporary furloughs, and reductions in hours and pay. The risks are highly skewed: people and places with the lowest incomes are the most vulnerable to job loss. Nearly 50 percent of all the jobs at risk are in occupations earning less than £10 per hour. (The median hourly pay in 2019 was £13.30.) The proportion of jobs at risk in the 20 lowest-income subregions-such as Blackpool, Stoke-on-Trent, and Torbay-ranges from 23 to 29 percent, while the range for the 20 highest-income regions is much lower, at 18 to 25 percent.

In the rest of this article, we share our analysis of the jobs at risk in the United Kingdom and how they differ by region, sector, occupation, education level, age, gender, ethnicity, and family status. We also suggest a number of priorities for the government and business leaders. For a detailed explanation of the methodology used, please refer to the sidebar in " Lives and livelihoods: Assessing the near-term impact of COVID-19 on US workers."

The lockdown is already having a major impact on jobs

We estimate that in the weeks from April 6 to 19, 2020, around 22 percent of the United Kingdom's working-age population, or nine million people, had been furloughed (Exhibit 1). At that time less than 1 percent of businesses reported ceasing to trade permanently or having laid off people. However, the knock-on consequences of the lockdown are anticipated to result in significant job losses down the road. Businesses' ability to continue to employ and pay workers might be particularly precarious when government support starts to be withdrawn.

In the four weeks from March 16, there were 1.4 million new applications for social assistance through the universal credit system, a sixfold increase on previous levels. McKinsey's modeling, in partnership with Oxford Economics, suggests that in a midpoint scenario, unemployment could peak at 9 percent, up from 4 percent in February 2020. Some of this is likely to be because of furloughs being converted into job losses, while some will be because of second-order effects felt in the supply chain upstream of the sectors in lockdown, in the United Kingdom and abroad.

The implications for workers go far beyond those furloughed or laid off, however. According to research by the London School of Economics, increased unemployment creates significant anxiety among those who retain their jobs; the negative impact on well-being experienced by the whole community is four times the effect on the individual alone. Moreover, for people still at work, much has changed. Around 30 percent of the United Kingdom's roughly seven million key workers are concerned about health and safety at work. Only a minority of all UK workers, around eight million people, are working from home, but almost 20 percent of them are finding it difficult. Overall, 40 percent of people say their work has been affected.

The impact across sectors is highly uneven

The current statistics on furloughs already indicate how very differently specific sectors have fared. For example, in the first half of April, 73 percent of workers in accommodation and food services and 46 percent of those in construction had been furloughed. At the same time, 14 percent of those in water utilities and 13 percent of those in information and communication had experienced the same fate (Exhibit 2). Likewise, even though schools, colleges, and universities have been closed, the people employed in the education sector have mostly continued to be employed and paid.

Our forward-looking analysis of jobs at risk arrives at similar patterns. The retail and wholesale sector has the largest number of jobs at risk-1.7 million, or 22 percent of the total 7.6 million. While demand for labor in grocery and online retail and related wholesale activities has gone up, this is outweighed by the significant number of temporary store closures in nonfood retail. The second-hardest-hit sector in absolute terms is accommodation and food services-with 1.2 million relatively low-paid workers at risk (see next section). Arts and entertainment and construction are also highly vulnerable, as are subsectors of transportation, such as airlines.

These findings mirror those from McKinsey's previous research on jobs at risk in Europe and in the United States, with one or two differences. Compared with other countries in Europe, a significantly larger share of retail in the United Kingdom-around 20 percent of nonfuel sales-was already conducted online prior to the COVID-19 lockdowns, and the crisis has accelerated this trend. On balance, therefore, a slightly smaller share of UK workers in retail and wholesale are at risk, despite this being a large sector in absolute terms. A major difference compared with the United States is the position of the healthcare and social-assistance sector, which has the third-largest pool of at-risk jobs in the United States. Our analysis of data for Europe and the United Kingdom suggests a more modest impact on jobs in that sector.

In each geography, the stark differences among specific sectors reflect three factors that combine to make some sectors more prone to furloughs and job losses. Physical proximity to other workers or members of the public in certain jobs-such as bartenders or amusement-park attendants-makes them unsafe to continue. Indeed, these are the sectors that are in lockdown in order to minimize the spread of the virus. In addition, it is not possible, in practice, to work remotely in roughly 60 percent of occupations, because the place of work is fixed (such as for a sales assistant) or requires specialist equipment (such as for a laboratory technician or bus driver). Even for occupations that could be performed remotely in theory, not all employers are able to supply their workers with the required IT tools. We estimate that only around 20 percent of the working-age population (or 40 percent of those at work and not furloughed) are currently working remotely.

Even where businesses continue to keep their doors open, some have experienced an abrupt decline in customer demand and revenues. For them, continuing to keep people on their payroll may be untenable. The McKinsey Consumer Sentiment Survey for the United Kingdom suggests that most households are cutting down expenditure in all categories, with the exception of groceries and at-home entertainment. This will affect many manufacturing sectors, such as cars, apparel, furniture, and appliances, as well as service sectors, such as sports, entertainment, and travel. Demand for some B2B services, such as building services and recruitment, is also down.

The most vulnerable workers are most at risk

Unfortunately, in the COVID-19 crisis, there is a strong correlation between the likelihood of a worker being furloughed or laid off and them having previously been on a low income. This is already apparent from the sector analysis described earlier. The median gross hourly pay in hospitality and food-service activities in 2019 was around £8.60; in information and communication, it was £19.20. More broadly, the weighted average median pay in the five hardest-hit sectors is around £10.60 per hour; for the five least affected sectors, it is around £14.60-or nearly 40 percent higher.

But there are even sharper differences between occupations. The proportion of jobs at risk in elementary occupations-which employed 3.3 million people in 2019 and include jobs such as cleaners, kitchen assistants, waiters, and bar staff-is around 44 percent. In contrast, the same number for professional occupations-such as computer programmers, project managers, and accountants-is around 5 percent. The latter category is also much more highly remunerated, attracting average pay around 2.4 times that of elementary occupations. The occupational picture in the United Kingdom is similar to our findings for Europe as a whole, where the largest job families at risk are those in customer service, sales, and food services.

Exhibit 3 illustrates the concentration of at-risk jobs in low-paid occupations. In the lowest wage bracket-where median gross hourly pay is less than £10-around 43 percent of jobs are classified as vulnerable. This is also the largest vulnerable category in absolute terms, with a total of 3.6 million people both vulnerable and in the lowest pay band. Overall, nearly half of the jobs at risk were in occupations that paid less than £10 per hour in 2019, in contrast with the United Kingdom's median pay of £13.30 per hour in 2019. This, too, is similar to findings in other geographies. For example, in the United States, the largest absolute number of vulnerable jobs is in the lowest pay band.

Not surprisingly, jobs at risk and pay are both correlated with levels of education. Only around 24 percent of employees in the hospitality, retail, and construction sectors have a higher-education qualification; more than 50 percent of workers in each of these sectors do not have qualifications beyond General Certificates of Secondary Education (GCSEs). At the other end of the spectrum, between 55 and 70 percent of people working in information and communication, financial services, or professional services have a degree or higher-education qualification. This does not mean all highly educated people are insulated from lockdown risk. For example, in the second-most-affected sector-arts, entertainment, and recreation-45 percent of employees have completed tertiary education (Exhibit 4).

Not only are people in the worst-affected sectors and occupations already earning less; if they are laid off, they are also likely to face worse employment prospects in the future. It is well known that unemployment rates are significantly higher among poorly educated people and that the number of vacancies-that is, available job opportunities-is correspondingly lower. These are not minor differences: for example, elementary construction workers in 2016 faced an unemployment rate of 10 percent while engineering professionals' unemployment rate was a tenth of that, at 1 percent. Moreover, looking beyond COVID-19, our research on the future of work, for women and for different skills and talent categories, suggests that these patterns may become even more divergent in the future.

Finally, our analysis sheds light on the vulnerability of different demographic groups in the workforce. We find that, with the exception of black, Asian, and minority ethnic (BAME) workers, jobs at risk are disproportionately concentrated in groups that might already be at a disadvantage (Exhibit 5). This is a marked difference to the United States, where nonwhite workers have a significantly higher probability of being furloughed or laid off because of COVID-19 physical-distancing measures.

Another vulnerable group is part-time workers, who only make up 24 percent of the United Kingdom's workforce but account for 35 percent of jobs at risk. In terms of age, around 45 percent of the more vulnerable jobs are held by younger people aged 35 years or less. Young women in particular score the highest on jobs at risk of all age and gender groups, partly because of their high representation in jobs such as sales and retail assistants, receptionists, cleaners, and waiters. Women are also six times as likely as men to be lone parents, another demographic category that holds a disproportionate share of jobs at risk. Women overall are no more vulnerable than men, but the patterns by sector and occupation are highly varied. Interestingly, this is in line with previous research-in the context of automation and the future of work -which found that the high-level averages hide a gendered and polarized labor market.

Finally, employees of a nonwhite ethnicity are somewhat more likely to work in jobs that are at risk from COVID-19-related furloughs and layoffs in the short term. The overall share of nonwhite workers is around 14 percent of the UK workforce, but they currently fill around 15 percent of the jobs at risk. In the COVID-19 crisis, there are factors operating both in favor and against BAME employees. On one hand, 16 percent of key workers are nonwhite-a larger proportion than their share in the overall workforce.

On the other, certain at-risk occupations tend to be disproportionately filled by BAME workers.

Examples include taxi drivers and chauffeurs, where BAME groups make up 13 percent, 5 percent, and 4 percent of employment, respectively. People of Asian ethnicity, who account for 7 percent of the United Kingdom's total workforce, make up 13 percent of cooks, chefs, catering, and bar managers and driving instructors. Black workers, whose share of employment overall is 3 percent, make up 6 percent of such vulnerable jobs as dental nurses, workers in the apparel trade, and cleaning occupations. Jobs at risk among mixed and other ethnicities include housekeepers and actors, entertainers, and presenters.

Lowest-income regions face the biggest challenges

The UK has long suffered from significant regional income disparities, and these might be made worse by COVID-19-related furloughs and layoffs. Much will depend on how quickly organizations can return to full operation once lockdown restrictions are lifted and the degree to which any fiscal stimulus during and after the crisis can be effectively targeted to support the most deprived people and places. In the short term, however, lower-income areas of the United Kingdom appear most at risk.

Safeguarding Europe's livelihoods: Mitigating the employment impact of COVID-19

This is because the same phenomena observed prior in this article also operate at the geographic level. As outlined in the Industrial Strategy Council's report UK regional productivity differences: An evidence review, socioeconomic factors across different regions of the United Kingdom are highly correlated. This means that areas that have more highly educated people also tend to have more productive firms, higher salaries and incomes, and higher employment rates. They also tend to have a greater predominance of high-value-added sectors and a larger share of well-paid occupations within those sectors.

As Exhibit 6 illustrates, this results in differences in the share of jobs that are at risk in each region. While the proportions of key workers are broadly similar in each area, there are other marked sectoral and occupational differences. The share of jobs at risk in the 20 lowest-income subregions-such as Blackpool, Bridgend, and Stoke-on-Trent-ranges from 23 to 29 percent, while the range for the 20 highest-income regions is 18 to 25 percent. (As mentioned previously, the national average is 24 percent for the United Kingdom as a whole.) While the high-level sector mix across regions is fairly similar, occupational differences are significant.

In areas at higher risk of job losses, there is a greater proportion of elementary and skilled trades occupations, and a smaller proportion of professional occupations. For example, around 26 percent of the total workforce in the 20 most at-risk subregions is accounted for by elementary and skilled trades occupations, while the same figure in the 20 least at-risk subregions is 16 percent. In contrast, professional occupations make up 26 percent of the workforce in the least vulnerable subregions but only 15 percent in the most vulnerable. As a further illustration, the three largest occupations in Oxfordshire-a high-income region-are teaching and educational professionals, functional managers and directors, and sales and marketing associate professionals; in Blackpool, they are sales assistants and retail cashiers, caring personal services, and other elementary service occupations.

Government and businesses need to prioritize helping the vulnerable

The dual imperative of our time, for both government and businesses, is safeguarding lives and livelihoods. For government, the short-term actions have rightly been focused on avoiding permanent job losses and minimizing failures among otherwise viable businesses. These cash injections will help reduce the amount of structural damage in the economy during the lockdowns, which have been necessary for now to control the spread of the virus.

Businesses' main effort has been to keep both employees and customers safe while, of course, doing their best to ensure the continuity of customer relationships and operations.

As we move into the next phase of the crisis, it is important that both public- and private-sector leaders pay heed to the potentially rapid divergence in the fortunes of different groups of people. For the software engineer living in Edinburgh and enjoying increased customer demand as businesses and households shift to digital channels, the situation could be net positive: working from their comfortable home, with high-speed broadband, they might be seeing more of their immediate family and spending less time commuting. At the same time, large numbers of people are unable to earn a living, either at their normal places of work or remotely, and are likely to be experiencing heightened anxiety about their incomes and jobs.

For the UK government, three priorities-beyond managing the health emergency-stand out. First, as it gains more information about furloughs and job losses across the nation, the government needs to ensure that the mechanisms in place channel support to the most vulnerable segments of the population. Second, it needs to reprioritize and significantly bolster its "leveling up" agenda and consider all the levers available-perhaps as part of future fiscal stimulus-to build economic dynamism in left-behind areas.

Third, to get people back to productive work as soon as possible, retraining and reskilling of unemployed people needs to be scaled up. Adult training has historically been a weakness, which the COVID-19 crisis will throw into sharp relief. Even if employment were to return to previous levels in the next year or two, the shape of the economy and labor market would have shifted significantly. Investing now to upskill workers and to prepare them for the broader trends driven by automation and digitization will produce high returns on investment in both the short and longer terms.

For businesses in Britain, there are a number of strategic implications, but they vary by company. All will need to plan ahead to anticipate the shape of the recovery and to prepare for the next normal. Those whose sales and operations span the entire country or several customer segments will need to reimagine their product and sales offerings and channels to market to match the large-scale shifts in consumer incomes, attitudes, and behaviors. The highly differential impacts on local labor markets and specific occupational categories may create opportunities for companies to reconfigure their talent acquisition-for example, by identifying latent skills among the newly unemployed. Many may see this as the time to reinforce their belief in purpose-led and socially responsible business.

Historically, rapid economic and social disruptions and increases in inequality have tended to result in rising distrust and discontent. Government, business, and third-sector leaders will need to redouble their efforts to mitigate this trend as the COVID-19 crisis evolves.

About the author(s)

is a director of research and economics in McKinsey's London office, where Marc Canal is an associate and Vivian Hunt is a senior partner.

The authors wish to thank Spencer Dowling, Alok Singh, Gurneet Singh Dandona, and Robin Van Aeken for their contributions to this article.

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COVID-19 in the United Kingdom: Assessing jobs at risk and the impact on people and places

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As governments around the world seek to save lives by slowing down the spread of the coronavirus, they are having to take dramatic measures, with big implications for economic activity. The United Kingdom declared a lockdown on March 23, 2020, to control the COVID-19 pandemic.

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Since social distancing began, TikTok's popularity has skyrocketed across all ages, eliminating preconceived notions it was only a 'Gen-Z app' and making the time ripe for campaign experimentation.

Key takeaways

While products that go viral on TikTok can lead to sudden spikes in sales, brands and retailers shouldn't be too focused on that conversion as a metric of success. Instead, marketers should focus on the opportunity TikTok presents to reach a wider audience without the need for paid advertisements. The popularity of the 'For You' page means that organic growth is easy to achieve on the app when brands post consistent and on-trend content.

For those looking to capitalize on advertising on the app, these are currently the four types available: sponsored hashtag challenges, home screen takeovers, branded lenses and auto-play vertical videos.

TikTok might not seem relevant to your brand now, but it will eventually turn into another staple social platform your brand needs to have a presence on. Currently, user activity on TikTok is high, making it the best time to experiment with different forms of short video content and figure out what works best to engage an audience.

While the app is still evolving, it's the perfect time to start planning your content strategy, especially in regards to advertising. Find out how fashion and beauty brands and retailers are using the platform right now to get inspired on how to plan your future content.
Learn more about how EDITED data can transform your processes to compete in today's market.
How does TikTok work?

TikTok is Gen-Z's favorite social video app that allows users to upload short videos to the platform under 60 seconds long, with 15 seconds being the most common time-frame that the app automatically defaults to on the recording screen.

In contrast to Instagram, users tend to scroll through the 'For You' page (similar to the explore feature on Instagram) rather than clicking on to the 'Following' tab. Getting onto the 'For You' page gives the potential for videos to go viral and is a good indicator of what challenges and sounds are currently popular.

Users can choose from a wide variety of sounds and song snippets to use with the option to add filters, effects and text to their video afterwards. The stop/start function also allows users to create fun transitions, which are currently popular on the app.

How are fashion brands making a presence on the app
Challenges
Crocs joined TikTok after noticing that its shoe was going viral due to the #shavingcreamchallenge. To keep momentum up, they created their own challenge inspired by the ' thousand dollar Crocs ' lyric in Post Malone's song. Within 24 hours, Crocs saw an 18% increase in followers on the app.

Ralph Lauren, a sponsor of the US Open Tennis Championship, launched a #WinningIRL campaign with actress Diana Silver, encouraging users to create their own videos using the 'Clap' sound.

In summer 2019, Uniqlo executed the first TikTok multi-market campaign. The challenge was created specifically for the app, encouraging users to showcase their creativity wearing Uniqlo items. The winning videos were used for the brand's own content with the hashtag generating over 700 million views. However, Uniqlo hasn't kept up its presence on the app since, which has left the brand under the 10k following mark.
Campaigns
While shooting campaigns, boohoo captured additional content with the Hembrow sisters, getting them to perform the TikTok popular song Say So by Doja Cat for a video.
How-To
A popular trend on TikTok at the moment is DIY tie-dye. ASOS created a video showing its followers how to tie-dye a pair of Nike socks. The retailer also posted an informative video showing the correct way to lace Vans.
Introduce the team
A fun way to kick-off your TikTok channel is by introducing the team. ASOS filmed a voice over video to the tune of 'Friends', which went viral on the app, seeing over 400k views. NA-KD also introduced its social team by using the popular #weirdthenwave challenge.
Styling
ASOS has been creating its own styling videos using transition effects. These include 'What I Wear For' videos, which have seen over 10k views.
Behind-the-scenes
Missguided has seen success in posting behind-the-scenes content, taking its followers behind the camera on shoot days. In particular, one of its most popular posts was a BTS clip from a festival shoot, which garnered over 156k views and 19k likes.
New-in drops
ASOS has seen a good response from its sneaker videos, where the retailer showcases new drops in an unboxing style video.
Timeline of brands/retailers joining:

2017: Old Navy

2018: Gymshark, PrettyLittleThing, Missguided

Jan-Jul 2019: ASOS, boohoo, Fashion Nova, Nasty Gal, NA-KD, I Saw It First, River Island and SHEIN

Aug-Dec 2019: Superdry, Selfridges, Zalando, boohooMAN and Topshop/Topman

Feb 2020: New Look, Nike, PacSun, Lulu's, MissPap, Gucci and Dolce & Gabbana

Mar 2020: Revolve, In The Style, Saint Laurent, Urban Outfitters

What about beauty retailers?
Challenges
Many beauty brands joined the platform when they noticed a sudden spike in sales, finding success from products being featured in viral challenges on the app. For Too Faced, its Lip Injection Gloss began to see sell outs, despite having launched six years prior. The brand then created its own #TFDamnGirl challenge for the launch of its new mascara.

Similarly, Marc Anthony saw an unexpected 60% boost in sales, which led to the discovery of the trend on TikTok. The brand created the #StrictlyCurls and #DreamBigVolume Challenge to further encourage user participation with its products.

Although not shared on its own page, MAC Cosmetics ran one of TikTok's most successful campaigns with the #YouOwnIt content, garnering over 2 billion views. The campaign launched during NYFW and featured 18 influencers who posted paid content on their own platforms. While the campaign was a huge success, MAC Cosmetics could have utilized more of the content on its own page to further connect with its audience and grow its own channel.

Other viral products on the app include The Ordinary's AHA 30% + BHA 2% Peeling Solution and the Freck freckle pen. Products that have instant before/after results, or are visually enticing when used, are two key attributes to a product going viral.
Close-up/swatches
Swatches are already popular within the beauty community and also work well on TikTok. Benefit regularly posts close-ups of its products. This type of video coincides well with the launch of beauty products to help create buzz.
Tutorials
Fenty Beauty has used its Fenty house members to create consistent makeup tutorials for its channel. It's important for brands not to re-use content that they have created for other platforms, but create original content to popular sounds on the app.
Makeup hacks
Sephora posted a 'Milk Makeup' beauty hack, mixing powder with moisturizer and adding its own ASMR sound for extra effect. Fenty Beauty also posted a 'how to stay matte all day' hack using its own products. Both posts received over 60k likes, indicating that followers were saving the video to refer back to later.
Behind-the-scenes
Morphe often post extra content surrounding its meet and greet events with influencers, as well as a behind the scenes look at its own offices.
Timeline of brands/retailers joining:

2017: Fenty Beauty and Sephora

2018: LookFantastic

Jan-Jul 2019: TooFaced

Aug-Dec 2019: Kylie Cosmetics, Morphe, NYX Cosmetics UK, ELF Cosmetics, Benefit, EOS and Colorpop Cosmetics

Jan 2020: Cult Beauty and Huda Beauty Shop

Mar 2020: Revolve, In The Style, Saint Laurent, Urban Outfitters and The Ordinary

Adapting to COVID-19
Educational
Although posted late last year, now is a great time for beauty brands and retailers to encourage customers to use their virtual try-on AR tools to help customers get comfortable with purchasing online.
Showcasing employees
With many companies working remotely and having no access to content studios, social teams are stepping up from working behind-the-scenes to filming in front of the camera.
Influencer collaborations
Retailers and brands are leaning on influencers more heavily than ever to create content. Both boohoo and Ulta Beauty put out an open call for applications to be TikTok ambassadors, following the success of the Fenty Beauty content house.
EDITED user? Login to read 1. Keep an eye on popular challenges and hashtags our report on the best ways to leverage the power of influencers on TikTok and what success campaigns look like. 2. Encourage user participation
TikTok Tips
3. Don't repurpose content
Use the Discover tab on the app to keep up-to-date with trending hashtags and challenges, as well as scrolling through the 'For You' page to get a grasp of popular sounds. Staying on top of trends that you can participate in is important for relevancy, increasing your chance of going viral.
4. Go Pro
Challenges are the most popular videos on TikTok. Brands should consider creating their own that users can easily join in on and pin their challenge so it remains at the top of the page.
5. Measuring success
Content should be specifically created to suit the style of the app. Re-publishing video content intended for other platforms, such as highly editorial campaigns doesn't see great results. Think of creative ways to make your videos snappy, engaging, fun and informative.
6. Advertising
Make sure that you switch your account to Pro so that you can analyze how your videos performed and gain a stronger understanding of your follower demographics.

While we have learned that products going viral on TikTok can lead to sudden spikes in sales, brands and retailers shouldn't be too focused on conversions as a metric of success. As the platform continues to evolve, marketers should be focusing on the opportunity TikTok presents to reach a new and wider set of eyes without the need for paid advertisements. The popularity of the 'For You' page means that organic growth is easy to achieve on the app when brands post consistent and on-trend content.

If brands and retailers do want to advertise, there are currently four types of advertising available on the platform:

Sponsored hashtag challenges

Home screen takeovers

Branded lenses

Auto-play vertical videos

For more analysis on the industry and data backed insights, sign up to our weekly Insider Briefing.

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The essential brand marketing guide to TikTok | EDITED | The Retail Data Company

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Key takeaways While products that go viral on TikTok can lead to sudden spikes in sales, brands and retailers shouldn't be too focused on that conversion as a metric of success. Instead, marketers should focus on the opportunity TikTok presents to reach a wider audience without the need for paid advertisements.

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"Cosy", "craftsmanship" and "conscious" are the new retail buzzwords as the coronavirus pandemic continues, says Dana Thomas.

In 'Get Your Greens', an ongoing series in line with the 50th anniversary of Earth Day, British Vogue explores how the industry is advancing towards a greener future.
Social isolation has given us all time to reevaluate many things - not least our consumer habits, and the impact our purchases have on the planet and on humanity. We've seen - and celebrated - the return of dolphins in Sardinia's ports. We're horrified to hear that some brands aren't paying their bills in Bangladesh, and that garment workers are being sent home with no pay. We are realising that we have the power of the purse - that we not only drive style trends, but also social trends, as well as business trends. (And, through social media pressure, can make businesses #PayUp.) But will we change our behaviours for good?

Let's start with the now: social isolation. Pyjamas bottoms have become a go-to look. (I have heard more than one Zoom conference attendee in the last couple of weeks admit that while the top we see on screen is chic, the bottoms off-screen are PJs.) Comfort is what we hunger for, and what we need. Yes, we're still shopping online - some brands report up to an 80 per cent increase on normal sales. But what we are buying reflects this new reality. "There's a feeling of sensuality, and pampering ourselves," Soho retailer Alex Eagle reports of the purchases made from the e-tailing arm of her eponymous Lexington Street shop. Customers are ordering her handmade pyjamas, cashmere socks, and beauty products by Gucci Westman. "Things that create a sense of cosiness, or of well-being," she said.

Read more: Amber Valletta's Guide To Sustainably-Made WFH Wardrobe Hits

Natalie Kingham, fashion buying director at Matchesfashion.com, concurs. The e-tailer has seen an uptick in "relaxed luxury activewear and effortless pieces that are comfortable to wear around the house, from loose pants and sweats to knits and slides that are easy to slip on," she says. If fashion truly is about capturing and reflecting the zeitgeist, then our clothing choices right now are spot on.

But what about when we come out of confinement? Will we pick up the sort of shopping habits that we did before - the sort of shopping that has driven us to purchase 80 billion garments a year? Or will that I-need-a-new-dress-for-Friday-night thing, the shopping-for-entertainment thing, the idea of an "It" bag or a "must have" feel frivolous, unimportant, and unnecessary?

Read more: The Garment Worker Crisis In Bangladesh Proves A 'Buy Less, Buy Better' Approach Is The Only Way Forward

Kingham believes consumers will make "considered purchases" in the future, buying pieces that honour "craftsmanship and artisanal values". That was in full evidence when China eased stay-at-home restrictions earlier this month. Hermès, a top luxury brand famously committed to craftsmanship, rang up $2.7 million (£2.2 million) in sales in one day in its Guangzhou flagship, according to WWD. Shoppers snapped up handmade bags, such as a diamond-studded Himalayan crocodile Birkin. It was said to be the largest single-day tally for a boutique in China ever. This reminded me of a story that Robert Chavez, president and CEO of Hermès's American subsidiary in New York, recounted to me for my first book, Deluxe. The terrorist attacks on 11 September 2001 in the United States caused one of the worst retail years in history - as with Covid-19, people stopped shopping. But for Hermès, sales went up. "After September 11, a lot of people came in to buy that one special scarf or tie or bag," he said. "They'd say, 'I just want to have that one special thing.'"

"Investment items will be paramount, whether a great coat, a pair of timeless boots or a piece of fine jewellery," Kingham says. Already at Browns, Ida Petersson, the womenswear and menswear buying director, says she has seen a rise in the purchase of fine jewellery, "as there are customers wanting to purchase investment pieces."

We'll also look more for sustainably-made items, with the help of retailers. Matchesfashion.com, for example, recently launched its "Responsible Edit", to guide shoppers toward brands which work in myriad sustainable ways. At Browns, Petersson says, "We were already seeing a shift in customers pivoting towards being more conscious in the way they shop. I think this will continue to grow."

Read more: "It's Hypocritical, It's False, It's A Sham": One Bangladesh Factory Owner On Why Brands Can't Turn Their Backs On Garment Workers

It makes sense. "People have had access to excess," says Cameron Silver, the owner of Decades, a "pre-loved luxury" boutique in Los Angeles. After confinement, "it's going to be about access to beauty, longevity, integrity - things that are meaningful."

But how to invest in better fashion with tighter budgets? After all, the economic slowdown is going to affect all of our wallets. As Silver likes to say (and the Duchess of Cambridge regularly proves): "It's chic to repeat!" With all this time on our hands, we can survey what we own, and put it back into circulation - in our lives, or someone else's life. To facilitate this, Silver has put together a Wardrobe Edit Guide, so we can smartly whittle down what we have, keep what we cherish, and consign what we are ready to part with. "The opposite of disposable, the notion of wearing something only once or twice is old-fashioned, and hopefully it's clear now in peoples' consciousnesses that their purchases should have a longer life."

"Fashion can bring us pleasure, but it shouldn't be a fleeting moment of pleasure," Silver continues. "The treasures in your closet continue to bring you joy season to season because of the memories they carry - the memories we create by wearing them. Maybe it's time to make more memories in the things we own."

Dana Thomas is the author of ' Fashionopolis: The Price of Fast Fashion and the Future of Clothes', available to purchase here.
More from British Vogue...

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How Will Covid-19 Permanently Affect Our Shopping Habits?

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Could the coronavirus permanently change our shopping habits and curb our consumerist tendencies? Dana Thomas speaks to Matchesfashion.com, Browns, Alex Eagle and a host of retailers to examine how our shopping habits are changing under lockdown - and whether the trends will persist.

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Retail industry

Coronavirus has already triggered a wave of high street failures, from Oasis and Warehouse to Laura Ashley and Cath Kidston. Hundreds of thousands of retail workers have been furloughed, with the aim that they will return to the shop floor when stores are allowed to reopen.

But there are growing fears that the lockdown may prompt huge changes in the way we shop, ushering in an era of fewer shops, more home deliveries, more local shopping and changes in the way we buy fashion.

The temporary closure of the high street has "shaken people's reality", says retail analyst Richard Lim, adding that the situation has forced consumers to reassess how and what they buy: "Most people have no experience of this kind of disruption so it's shaping their perception of what's possible."
UK childcare industry 'crushed' by coronavirus crisis
British retailers were battle weary after 2019 which was their worst on record. Sales fell for the first time in 24 years as growth in online shopping failed to offset the downturn on the high street and shoppers spent spare cash on leisure and experiences rather than clothes and homewares.

It is estimated that the financial reckoning faced by the retail sector will result in 20,620 store closures this year - up from about 16,000 in 2019 - and trigger nearly 250,000 job losses, according to a new analysis based on a three-month lockdown by the Centre for Retail Research (CRR).

Prof Joshua Bamfield, the CRR's director, said the coronavirus was a "hammer blow" for retailers: "We expect more companies to go into administration followed by the current pattern of an acquirer purchasing a small number of well-performing stores plus the brand names and the rest of the stores to remain unsold."

The toll on jobs will be substantial. The demise of Laura Ashley and Cath Kidston alone has cost 3,000 jobs.

Britons were already enthusiastic online shoppers but retailers including the John Lewis and Curry's PC World chains reported a near doubling of online sales since the quarantine began, and Bamfield predicts that rapid growth will continue, causing even "greater problems for bricks-and-mortar stores".

This week Sharon White, the John Lewis group's chairman, said the company feared sales at its department store chain could fall by a third this year despite increased sales through its website. The financial pressure created by the abrupt shutdown has already put Debenhams into administration for the second time in a year.

Retailers fear the coronavirus pandemic could permanently change consumer habits

White, who had warned of looming store closures and job losses before the pandemic said she would now have to consider "changes in consumer behaviour to come out of the pandemic, such as a more pronounced shift to online and a desire to shop in more sustainable ways".

Lim, who runs the consultancy firm Retail Economics, predicts the crisis will hasten changes already under way, resulting in half of all non-food spending moving online - up from around 30% today.

Before the pandemic, only 7% of groceries were bought online - though capacity has doubled in recent weeks - whereas half of all electricals and books were already bought on the web.

Lim says Covid-19 has forced shoppers who had never shopped on the internet to give it a try. "Sections of society are being forced to go on a customer journey they wouldn't otherwise have embarked on. People who couldn't be bothered to try online shopping are getting past the initial friction of setting up an online account and inputting their payment details."

Lim also believes the enforced holiday from consumption could lead to reduced materialism. "Two decades of importing deflation from China means we have had price falls in retail categories like clothing and footwear," he said. "Arguably we've got an abundance of material possessions and we attach less economic value to certain products."

"The pause for reflection that consumers are making at the moment could lead to a reassessment of what's important," says Lim. "If I have sat here for the last three months and I haven't bought a new pair of shoes or a handbag maybe it wasn't as important as I thought it was?"

Consumers may need coaxing back to shopping centres with financial incentives and reassurances that it is safe. In China, the authorities have been giving away shopping vouchers to encourage shoppers back into the malls.

In Dubai, the reopening protocols for retailers include thermal scanners at mall entrances, time-limited shopping sprees and signs outside indicating when the safe limit of customers has been reached inside. Closer to home Curry's intends to offer a "drive-through" service in its car parks for those who no longer want to linger.

Primark, which is losing £650m in sales for every month its stores remain closed, said this week that it expects shoppers to be cautious about returning. John Bason, finance director at Primark's owner, Associated British Foods, said he didn't "expect deserted high streets to just go bang" but that trade would build over time.

Diane Wehrle, insights director at Springboard which specialises in tracking shopper numbers, said that smaller high streets had hung on to more shoppers than bigger towns as people stayed local, but she does believe that shoppers will return to bigger towns and cities "if things work out and we don't get a second rush of cases".

Springboard is working on an occupancy alert service for centre owners so they can use technology to manage crowds and keep shoppers in the loop. "Malls will need to be able to track occupancy," said Wehrle. Customers will be kept up to date via social media.

This week B&Q reopened 155 stores with "strict" safety measures that will make visiting a DIY retailer a chore even for the most avid enthusiast. Retailers such as John Lewis and Marks & Spencer will have a head start when the time comes to reopen as they have been able to use their food businesses to devise workable social distancing measures.

Shopping for pleasure seems a lifetime ago.

How coronavirus changed the world in three months - video
The future of shopping
Amid fears that some high street brands may be forced to close permanently under the UK lockdown, the Guardian asked readers about how they think their shopping habits may change after the lockdown ends.
Breaking the takeaway coffee habit

Consumers say the pandemic may break their takeaway coffee habits. Photograph: Nick Ansell/PA

Andy Lee, 36, from Warrington, estimates he will save about £50 a month. "I was spending so much money in Starbucks," said Lee, who works as a local government worker. "My other half and I have discovered Nespresso though, and are using around 15 capsules a day between us."

"I can't see myself going back to takeaway coffee but I miss not having meals out. It's a bit embarrassing but the first thing I want to do after lockdown is get a McDonald's."

Sarah Crooks, who lives in the Peak District, will also be be giving up her takeaway coffee habit. "Before I must have bought up to 10 coffees a week, often accompanied by a biscuit, cake or a sandwich,'" said the lecturer ,who is in her mid-50s. "I did it so often that it was almost a reflex.

"Breaking the habit and saving so much money is one of the positive side-effects of all this."
Fewer clothes - but more online

Sharanya Basu Roy. Photograph: Sharanya Basu Roy

Sharanya Basu Roy, 29, an associate lecturer from Derby, said: "The lockdown has definitely made me less materialistic. I will be reducing my spending on eating out, clothing and fashion accessories. They are not environmentally sustainable and there are things in life that are more important."

Anna Oldbury, 43, a food producer, from London. "I will definitely spend less on seasonal garments and fast fashion," she said. "I'm not likely to shop on the high street anymore when you can buy it all online. However, I do still want to support independent shops and boutiques."

Anna Oldbury with her husband and two daughters Photograph: Anna Oldbury
Shopping
A 54-year-old reader from Buckhurst Hill, who preferred not to give her name, said she had a poor experience with one of the larger supermarkets getting deliveries organised for her elderly father, but that local retailers had helped.

"I understand it's a terrible time but smaller companies have really stepped up to the mark and I'd rather support them. They're also more likely to need our custom to survive this."

Richard Stone, 43, a managing director of a PR consultancy firm from Stafford, said he would also be shopping and eating more locally. "Our local plastic-free supermarket has been delivering throughout the crisis and when it's over I plan to use them even more.

"When the lockdown is over, I plan to visit all the local shops and restaurants I love, providing they've survived the pandemic - to help support them. I live in a small county town and if you don't use it, you lose it, from a retail perspective."
locally

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Will shoppers return to the UK high street after lockdown?

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Retail industry Coronavirus has already triggered a wave of high street failures, from Oasis and Warehouse to Laura Ashley and Cath Kidston. Hundreds of thousands of retail workers have been furloughed, with the aim that they will return to the shop floor when stores are allowed to reopen.

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As we see the exponential growth in dialogue around sustainability, environmentalism, the climate crisis and social justice, the term 'greenwashing' is becoming ever more important in separating the do-gooders from the wannabes. Orsola de Castro, founder and creative director of Fashion Revolution, explains that whether it's "whitewashing or greenwashing, these [issues] are problematic in every industry, not just fashion, as they prevent the truth being told. Our clothes should be covering up our bodies, not the reality in which they were made." I couldn't agree more.

What exactly is greenwashing? The term was coined in the 1980s by environmentalist Jay Westerveld to describe outlandish corporate environmental claims that were deemed false. Now, greenwashing is used when a brand's marketing around sustainability runs counter to its actual business practices. Essentially, brands recognise a sales opportunity by running sustainability-focused marketing campaigns with no intention of living up to their claims. Brands calling for sustainability can be great for raising public awareness of these matters but there is no doubt that many are engaging with the trend simply to shift more products. The ultimate issue is that consumers feel confused, overwhelmed and unsure whether their purchase is helping the planet or putting another penny into a greenwashing machine.⁣

Fast fashion houses are among the first to have been labelled greenwashers. Earlier this year H&M shared new green claims with , including a pledge to use solely recycled or sustainable materials by 2030. H&M also came first in Fashion Revolution's Fashion Transparency Index 2020. Don't these two facts make it sound like a truly sustainable brand? Yet many see these examples as strategic box-ticking exercises rather than a truly holistic way of doing business - and thus greenwashing. H&M has since been accused of not addressing the detrimental impact of mass production on the planet. From toxic dyes entering our water systems to failing to pay garment workers a full living wage, in my view, fast fashion can never be truly sustainable.

The truth is, a holistically sustainable brand does not only consider the environment. It also takes into account social justice factors, including equal pay, garment worker rights, safe factory conditions and more. A truly sustainable brand will address every one of these factors and have the accountability, traceability and facts to prove it. "True sustainability is a nuanced conversation that extends not only [to] the materials used or the labour conditions but [to] the scale of production and consumption as well," says sustainable fashion and social justice advocate Aditi Mayer. Ultimately we all want to build a more transparent, fair and intersectional fashion industry. It won't happen overnight but, as Aditi says, the goal is for brands to "not [use] sustainability or diversity as a pure selling point but a grounding philosophy of how the brand operates and understands the metrics of success."

In order to gain more transparency we must first get a few things straight. Here is a list of tips for becoming an anti-greenwashing expert and using your voice and knowledge to create real change.⁣⁣

Always look for figures to support new green claims and never take glossy and often impressive statements at face value. Companies which are truly committed to sustainable practices are proud to support their ambitions with measurable figures to hold themselves accountable, too.⁣⁣

Remember that buying something from a brand is an investment in that company and its values. "I also think it's important to look at who the brand is owned by and how much that person is worth," says slow fashion campaigner and activist Venetia La Manna. "General rule: don't trust fashion brands run by billionaires!" The end goal should be to invest in companies that integrate sustainability into everything they do and at all levels, not just a one-off collection or a handful of pieces.⁣

We must remember that however planet-friendly a material is, every item we buy passes through many pairs of hands before reaching the shops. A sustainable approach includes the fair treatment of the people up and down the supply chain, from garment and factory workers to local communities, transport employees and more. "We have to remember that many of the people making those clothes are poor women in the Global South who aren't paid a fair living wage," Venetia says. The unfortunate reality is that many fast fashion chains take advantage of factories in this part of the world because there are fewer health and safety restrictions and low living wages.⁣

Vegan doesn't equal sustainable

Many vegan alternatives are made from polluting and plastic-derived materials. These are hugely toxic for the environment and are often branded as vegan to make them more desirable and in line with current trends and consumer demands. ⁣We must question whether these brands are implementing sustainable practices in other areas of their business, not just material innovation. ⁣

Before you buy, read up on the brand or drop them a message on social media and ask questions like: Who made my clothes? How do you ensure your factories are safe? How do you minimise the environmental effects of making clothes? These questions will show the brand that you are a conscious consumer. You have the right to know the whole supply chain and if they don't answer, they don't deserve your purchase! Venetia says: "I think it's important for consumers to hold brands accountable and insist they do better if we're to achieve that all-important solidarity economy that puts the wellbeing of people and planet before corporate profits." ⁣

Orsola shares this important notion: "The more we know, the more we understand, the better we can hold that argument and be more forceful in demanding change." We need to take control of our spending and reclaim the power of which brands get our money and which don't. Every time you spend, you vote for the kind of industry you want to see. This is a key step towards living in line with your values.

Finally, Aditi states that "we can't undermine the power of collective consumer demand for the industry to pull up." Recent campaigns which have been calling for change in the fashion industry by demanding equality, fair pay and transparency include #WhoMadeMyClothes and ReMake's #PayUp petition. Each voice adds to a louder cry and can make all the difference, so when you next see a green statement from a brand you love, stop, think, ask questions and decide whether this is a company striving for change or simply greenwashing you into another purchase.

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What Exactly Is Greenwashing In Fashion & How Can I Spot It?

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As we see the exponential growth in dialogue around sustainability, environmentalism, the climate crisis and social justice, the term 'greenwashing' is becoming ever more important in separating the do-gooders from the wannabes. Orsola de Castro, founder and creative director of Fashion Revolution, explains that whether it's "whitewashing or greenwashing, these [issues] are problematic in every industry, not just fashion, as they prevent the truth being told.

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Some 43% of consumers say they will be more likely to support a fashion brand or retailer post-lockdown if they have treated their staff well during the crisis.

A new study carried out exclusively for TheIndustry.fashion of 2,000 fashion shoppers of all ages across the UK also shows that 32% will also make more of an effort to support small, independent brands moving forward.

The COVID Consumer: How Fashion Shopping is being Changed for Good report also features data on who is buying fashion while in lockdown, what they are buying and what they intend to buy once restrictions on non-essential physical retail are lifted.

Almost a third of consumers (31% overall) say they have bought adult clothing during lockdown, but when the data is broken down by age group it shows that 45% of 16-24 year old have purchased clothing online since the shops were shut down and along with 40% of 25-34 year olds.

Once lockdown is over, however, 30% of consumers overall say they will buy fewer clothes but those brands and retailers who will win out are those that have behaved ethically during lockdown.

Information about a brand or retailer's approach to staff welfare is the second most requested form of communication at this time (18%) after discounts and special offers (30%).

"The enthusiasm among young consumers for fashion even while in lockdown will go some way towards explaining the robust performances from ASOS and Boohoo, which have been recently revealed. But older consumers can still be tempted to buy with the promise of a discount, as our study shows.

"However, while a unprecedented level of discounting seems almost inevitable when the shops do re-open the importance of brand values and behaviour will also be at the forefront of consumers' minds, so now is the time for brands to work on their communications," says TheIndustry.fashion Editor in Chief, Lauretta Roberts.

Research for the report was carried out by expert agency Savanta from 1-5 April 2020. The full report can be downloaded FREE of charge here.

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Post lockdown shoppers will reward brands who treat staff well during crisis - TheIndustry.fashion

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Some 43% of consumers say they will be more likely to support a fashion brand or retailer post-lockdown if they have treated their staff well during the crisis. A new study carried out exclusively for TheIndustry.fashion of 2,000 fashion shoppers of all ages across the UK also shows that 32% will also make more of an effort to support small, independent brands moving forward.

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For two full weeks, from Wednesday 18 March to Wednesday 1 April 2020, Three Graces London will donate 100% percent to support Crisis' efforts to protect the homeless through the Coronavirus outbreak.

Three Graces London Founder, Catherine Johnson, said: "Whilst we retreat to the safety and comfort of our homes, I want to spare a thought for those who don't have that luxury. By supporting the incredible work of homeless charity Crisis, we hope to be able to play a small part in helping those who are at their most vulnerable and alone."

Crisis is the UK's national charity for homeless people. The charity believes that in 21st Century Britain, everybody should have a place to live.

78% of homeless people report having a physical health condition, compared to 37% for the general population - with conditions usually associated with older age more common amongst the homeless. Meanwhile, the average death of someone who is homeless is 45; substantially lower than the average person.

Now, in the midst of the Coronavirus outbreak, Crisis is calling on national governments and local councils to take emergency measures to ensure people experiencing homelessness can access testing and self-contained accommodation with private bathrooms.

Jon Sparkes, Chief Executive of Crisis, added: "We're enormously grateful to Three Graces for choosing to support us by donating all of the profits from their online sale."

"With the coronavirus outbreak, we've had to postpone some of our usual fundraising events - so the money raised by Three Grace's generous customers will help to ensure we continue to support thousands of people to leave homelessness behind by providing one-to-one services, education and training."

Read all of our COVID-19-related updates in our dedicated content hub here.

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Three Graces London donating 100% of net sales to help homeless during Coronavirus outbreak - TheIndustry.fashion

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For two full weeks, from Wednesday 18 March to Wednesday 1 April 2020, Three Graces London will donate 100% percent to support Crisis' efforts to protect the homeless through the Coronavirus outbreak. Three Graces London Founder, Catherine Johnson, said: "Whilst we retreat to the safety and comfort of our homes, I want to spare a thought for those who don't have that luxury.

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Fashion meets Fortnite: the industry is getting creative

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Fashion meets Fortnite: the industry is getting creative

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irtual clothing and cyberspace catwalk shows may sound like the stuff of a William Gibson novel. But with physical fashion weeks on hold, and many designers unable to produce their next collections owing to the Covid-19 crisis, the niche world of digital fashion has been catapulted to the mainstream.

"Anyone who wants to put on a catwalk show in June will have to go digital," says Kerry Murphy, founder of "digital fashion house" The Fabricant, which he says has seen a spike in interest since lockdown began. One of The Fabricant's clients, Tommy Hilfiger, is among brands already testing avatars, holograms and augmented-reality formats internally, the company's CEO, Daniel Grieder, told fashion trade title WWD.

The world's first entirely virtual fashion week, Shanghai fashion week, took place last month. Despite some technical glitches, one designer, Angel Chen, demonstrated the possibilities of the format with a thrilling five-minute presentation featuring real models and computer-generated graphics. Models were directed and styled via video link, because the designer was self-isolating.

Moscow fashion week was also shown virtually earlier this week, with 830,000 people streaming its shows. The British Fashion Council also confirmed that it is to replace its London fashion week men's showcase in June with a digital event. Helsinki fashion week, in July, will also be digital, a decision taken prior to the pandemic for environmental reasons, with all collections to be created by a 3D artist.

Another digital image from The Fabricant.

Shows could become even more immersive and hi-tech as the discipline evolves; 3D avatars wearing digitally created clothing, real models' faces beamed on to 3D bodies and real models wearing real or digital clothing are all options. "There is no wrong answer and brands don't need to use the catwalk format specifically - they are forced to be creative," says Murphy.

Murphy firmly believes that 3D clothing will soon become a mainstream consumer pastime, too, as technological advances allow those without 3D modelling skills and software to digitally style their own outfits. Last week, his company launched a beta platform, Leela, that aims to automate this process, enabling users to scan a picture of their face on to a 3D digital body and choose clothing for it to wear.

Digital fashion "is going to be as big as retail", insists Murphy, who argues that paying for digital clothing had already been normalised for players of Fortnite. "Everyone has a virtual identity, and that is only going to get bigger."

Digital fashion has clear sustainability benefits, enabling customers to buy "fantastical" outfits to express their identities on social media, without wearing an outfit once then consigning it to landfill, a trend that has become prevalent on social media.

"There's enough clothing in the world. This way brands can sell fewer physical items - can produce less stuff - but keep margins the same," says Murphy.

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Fashion meets Fortnite: 3D clothes and digital catwalks

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irtual clothing and cyberspace catwalk shows may sound like the stuff of a William Gibson novel. But with physical fashion weeks on hold, and many designers unable to produce their next collections owing to the Covid-19 crisis, the niche world of digital fashion has been catapulted to the mainstream.